Gulf consumers continue spending despite crisis
Dubai, July 21, 2009
Consumers in the United Arab Emirates and Saudi Arabia show strong spending habits despite the global economic slowdown, as confidence in regional economies remains high, according to a survey.
In Saudi Arabia, 43 percent of consumers boosted spending while 36 percent maintained the same levels in the face of the financial crisis. The poll by management consultants Booz & Company found 20 percent of Saudi consumers cut back.
Meanwhile in the UAE, a popular tourist haven which hosts an annual festival devoted to shopping, 55 per cent of consumers upheld consistent spending levels.
Another 37 percent reduced spending, while nine percent spent more, the survey said.
The poll of 1,200 people in the two Gulf states found only 28 percent of consumers curbed spending over the past six months, while 26 percent increased it.
Overall, consumer sentiment and spending levels emerged better in the Gulf region than other regions, the study said.
Dubai was hard hit by the global financial crisis, resulting in a drop in tourism activity and less retail spending, especially luxury goods.
Reductions in spending were not widespread, but restricted to small portions of the population, 'suggesting that some consumers believe their local economies can remain resilient despite gloomy global developments', said Gabriel Chahine, a partner at Booz & Company, in a press release.
However, the report said increased levels of spending was not necessarily a sign of additional spend on luxury items, but may have been caused by 'increased needs and inflation'.
The results showed that 'most consumers who have reduced spending are not forced into it, but are choosing to do so because of lingering uncertainty over the economy.'
Around 59 percent of UAE consumers and 46 percent in Saudi Arabia reported concerns about the economy, significantly fewer than in other countries.
Asian workers in the UAE reported higher reductions in spending than other groups in the country, the survey said.
'Western workers have continued spending: those concerned over the economy have generally lowered their saving rates, not their spending. Going forward, significant repatriation of foreign employees could impact overall consumption in the region,' it said. - Reuters