The good news is here. After a lull in spending post the outbreak of Covid-19, the residents in UAE are back on a spending spree. As per the survey results released by Friends Provident International, UAE residents have resumed splurging on clothing, dining out, petrol, and luxury goods.
The reasons attributed to the surge in spending are the ease of Covid restrictions and the drop in fuel prices. Consumer spending is back to earlier levels as the UAE economy is on the path of recovery and more jobs and growth opportunities are available in the UAE market for residents.
What Are The Survey Findings?
One more finding of the survey reveals that UAE residents are not likely to restrict themselves from spending on non-essential food items such as chocolates, biscuits, or cold drinks as only 3% of the survey participants plan to reduce spending on such goods in the next 3 months.
A minority, i.e. only 2% were willing to cut down spending on a new or budget car, holidays, personal care products that are non-essential in nature, and entertainment activities. Another interesting finding is that a majority, i.e 99% of the UAE consumers still prefer to continue spending on mobile phones, Over the Top (OTT) platforms such as Netflix, gym membership, beauty products, home furniture, and home electronics.
Against the backdrop of the surge in oil prices, The International Monetary Fund hiked UAE’s growth forecast last week to 5.1% as against its earlier projection of 4.2%. The boom in economic growth naturally leads to an expansion of core sectors of the economy. Thus, it ultimately leads to more employment generation for the residents and growth opportunities for the corporations.
Moreover, the survey results indicate that the rise in consumer spending is mainly due to the lowering of petrol prices and the lifting of Covid-19 restrictions that were imposed earlier. While speaking to the respondents, the general opinion was that with the reduction in petrol prices, people are back to their earlier habit of meeting up with friends who are residing in nearby emirates such as Sharjah and Ajman. Earlier, when the petrol prices were high, the residents had cut down on such casual visits. However, since fuel prices have now become affordable, people are back to their earlier practice of spending leisure time with friends.
Some interesting findings were revealed as part of other surveys as well. According to Dubai’s Department of Economy and Tourism (DET), 52% of the residents in UAE resorted to the practice of eating out at restaurants up to 3 times a week.
Another survey was conducted by Insight Discovery, a consultancy based in Dubai. It included 880 respondents and the results reveal that 26% of the survey participants planned to cut down spending on clothes. Clothes were the top area in terms of priority and the next area to consider cost reduction was petrol expenses. 15% of the respondents gave priority to the reduction of fuel expenses. Among the rest of the respondents, 9% of the residents were planning to cut down on weekend activities, dining out, and luxury products in the coming three months.
David Kneeshaw, group chief executive of IFGL, which owns FPI states that many of the UAE consumers are feeling the pinch of rising cost-of-living expenses and it is not surprising to witness that more than a quarter of residents are planning to cut down their spending on clothes and fuel. He went on to add that a good sign is that in spite of the financial crunch, the majority are not looking to lower their contribution towards their savings plan.