GCC consumer spending 'resilient'
Dubai, May 13, 2009
Despite the global financial crisis hitting the region, GCC residents have maintained their pre-crisis spending levels.
A recent Booz & Company survey of consumers in Saudi Arabia and the UAE found they are relatively untroubled about the region's economic prospects, according to a report in our sister newspaper Gulf Daily News.
Just 28 per cent of consumers in the UAE and Saudi Arabia have reduced spending levels in the past six months, and 26 per cent have increased spending.
Consumer sentiment and spending levels have held up better in the GCC than other regions. Some GCC consumers report fewer shopping trips, buying more sale items, and putting luxuries or other material purchases requiring large cash outlays on hold.
'Reductions in spending, however, are still not widespread - they are concentrated within a relatively small portion of the population, suggesting that some consumers believe their local economies can remain resilient despite gloomy global developments,' said Booz & Company partner Gabriel Chahine.
Roughly one-quarter of the UAE's and Saudi Arabia's consumers report spending less now than six months ago.
In the UAE, 55 per cent have maintained consistent spending levels since the crisis began.
Another 37 per cent have reduced spending, and 9 per cent are spending more.
In Saudi Arabia, consumer spending is more resilient - 36 per cent of consumers have maintained spending levels and 20 per cent have scaled back, but 43 per cent report spending more.
Some 59 per cent of UAE consumers and 46 per cent of consumers in Saudi Arabia report concerns about the economy, significantly fewer than in other countries.
'A possible explanation for this is the trust people have in the government as a continued source of employment. Lower levels of debt in Saudi Arabia could also give consumers a greater sense of confidence,' said Chahine.
A few trends emerge from the survey. First, the spending reductions taking place follow specific patterns: a greater reliance on sale-priced items, fewer shopping trips, and fewer occasions of dining out.
Entertainment now revolves around visits to friends' homes, rather than going out.
In Saudi Arabia, dining out with family is a strong cultural custom, which helps explain why consumers have made less pronounced cuts on that activity.
For material goods, the reductions vary by category of product.
Consumers have delayed luxury purchases along with higher-end home goods.