Kuwait remains optimistic during economic downturn, despite Consumer Confidence dipping for second consecutive time,

Despite the effects of the global credit crunch being widely felt in Kuwait, marked by the country’s second consecutive drop in consumer confidence by a record 16.7 points – the biggest drop of all the surveyed countries, job seekers are still optimistic for the future with 33% of Kuwait’s respondents believing business conditions- and 28% believing the country’s economy- will improve in the next year; according to recent research conducted by the Middle East’s number one job site - Bayt.com in conjunction with research specialists YouGov.

The trend of falling consumer confidence was repeated across the Gulf and Levant countries. The UAE’s consumer confidence was the next hardest hit, falling by 15.0 points, with dips in Bahrain of 12.0 points and Qatar of 8.9 points. Remarkably consumer confidence in KSA dipped by less than one point at 0.9, while confidence in Syria and Lebanon dropped by 9.7 and 8.0 points respectively. Lebanon’s large decline in February’s consumer confidence levels is starkly contrasted against a phenomenal improvement in the index of 25.5 points in the last wave conducted in November of last year.

Interestingly, North Africa did not appear to be as hard hit as the rest of the Middle East: Egypt’s consumer confidence dropped by 4.4 points, while Algeria was the only country that reported an increase – moving up the index by 1.5 points.

The Consumer Confidence Index (CCI) is a measure of consumer expectations and satisfaction of various elements of the economy including inflation, job opportunities and the cost of living.

“What we are seeing with the results of the CCI is that while the effects of the global economic downturn can’t be taken in isolation, they are having a significant impact on this region, and more specifically are affecting some Middle Eastern countries much worse than others. This sort of research is really important as an indicator of the prevailing feelings towards the current business and economic environment, because it comes from a grass roots level - from the people that are most affected,” explainedBayt.com’s Regional Manager, Amer Zureikat. “Conducting surveys such as the Bayt.com and YouGov Consumer Confidence Index on a periodical basis, to measure how attitudes and opinions have changed overtime, allows businesses, HR professionals and other stakeholders to benefit from up-to-date insights into how consumers are thinking; the details of which can then be significant drivers for adapting business strategies and making them relevant to the current environment.”

Part of the CCI is an assessment of respondents’ personal financial situation, and whether they feel that they are better, or worse off than the last 12 months. Surprisingly almost a fifth of all respondents in Kuwait (18%) felt that they were better off than last year, indicating that the gloomy financial environment isn’t negatively affecting everyone in Kuwait. Overall, on a regional level, a quarter of respondents felt they were better off; 34% felt they were worse off, and 35% felt their financial position hadn’t changed.

Personal finances improved most significantly in Algeria, Qatar and KSA, with 31%, 29% and 28% saying their financial position had picked up. Syria’s respondents were the most affected in terms of personal finances, with almost half, 48%, stating that the situation with their personal finances had deteriorated.

Consumer expectations and the level of optimism towards the future is another indicator for measuring consumer confidence. This also took a significant blow in all countries, with the exception of Algeria which marked an improvement. Kuwait moved down the index by 14.7 points and was again the country hardest hit. The UAE moved down by 12.3 points, while Qatar and Bahrain were next in line with the worst decreases; dropping 9.5 and 8.6 points respectively. Aside from Algeria, the least affected in terms of consumer expectation was Syria, marking a decrease of 1.9 points; suggesting respondents are remaining optimistic despite dropping consumer confidence levels.

There is some light however at the end of the tunnel according to the survey’s respondents, with 28% believing that their country’s economy would be better in a year’s time, while 20% believe it will stay the same. Respondents in Kuwait matched the average with 28% believing things would get better within their country’s economy.

The respondents were also optimistic when asked whether or not they felt their personal financial position and that of their family would be better in a year’s time. 38% believed things would improve, while just 12% felt their finances would worsen. Most optimistic in terms of an imminent improvement were Tunisia’s respondents, with 55% agreeing things would get better. In the Gulf, Saudi Arabia’s respondents were found to be the most optimistic, with 46% anticipating an improvement. In Kuwait, respondents were split on the future of their personal finances, with 29% saying things would be better, 13% stating things would be worse and 21% believing the status quo would prevail.

In terms of the propensity to consume, Syria was hardest hit, dropping 18.2 points on the index, followed by the UAE which dropped by 12.2 points. The picture around the rest of the Levant and the Gulf was not quite as bleak. In the Gulf; Kuwait and Qatar both recorded drops of 7.8 and 0.1 points and in North Africa; Morocco and Egypt both decreased by 2.5 and 0.7 points respectively. Surprisingly, almost half of the countries reported improvements in their propensity to consume – KSA and Lebanon both moved up 6.0 points each, Bahrain improved by 4.5 points and Algeria improved by 2.4 points.

When asked about consumer spending, just 19% of respondents believe that now is a good time to buy durable goods, with 46% deeming it a bad period. Lebanon, Tunisia and Algeria were the most positive about the current environment for spending money, with 24% of Lebanon’s respondents and 23% each of Tunisia and Algeria’s respondents citing it a good time to buy.

“The consumer confidence index provides an interesting and relevant set of insights into how consumers are feeling during a certain period and although it is just an indicator, it reveals a very clear picture of the countries where people feel it is still a good time to buy. This not only equips marketers and other companies with a strong insight for selling their products, but it sends a clear message to all involved in commerce that consumers are less inclined to buy at present; therefore brands offering strong value propositions will most likely succeed in these trying times,” said Nassim Ghrayeb, CEO, YouGov.

How people feel about the local job market and their attitudes towards availability of jobs and salary satisfaction is measured in the employee confidence index – a significant contributor to the CCI. Employee confidence took the biggest dip in Bahrain, moving down the index by a massive 20.0 points, closely followed Kuwait with a drop of 19.5 points. The UAE was not far behind, dropping 18.0 points.

The only country that showed an improvement was Lebanon, which moved up the index by 0.8 suggesting the Lebanese job market is currently strengthening. The Gulf was the hardest hit of the surveyed regions with Qatar and KSA also moving down by 13.0 and 6.5 points. The data demonstrates that with the exception of Lebanon, there is universal concern about job markets across the Middle East.

“As usual, the CCI data revealed that respondents feel that salary increases haven’t kept pace with the cost of living, with an overwhelming 64% saying that increases are not in line. Kuwait was slightly above the average in terms of people feeling the inadequacy of their salary raise, with 68% saying it hasn’t kept pace. Interestingly, 29% of respondents in Qatar said their salary had increased similarly to the rising cost of living, while at the other end of the spectrum; just over half of respondents in Qatar, 56%, believed salaries had not kept pace. It suggests that Qatar is not quite as badly affected as other markets at this time,” explained Zureikat.

Optimism has waned in terms of job availability in a year’s time the survey showed; with 41% of respondents believing work availability would be worse. A roughly equal split occurred in terms of people believing job availability would remain the same (23%), and availability would improve (21%). Most optimistic about the future availability of jobs at 30% was Tunisia, while conversely in North Africa, Egypt’s respondents were mostly pessimistic with just 16% stating the situation would be better. In the Gulf, Kuwait and the UAE shared the same pessimism about jobs being available in the future, with 49% agreeing the situation would be worse. The figures suggest that the majority of residents are feeling the effects of the ongoing credit crunch, but a proportion believe that things will soon look up. In Kuwait, 19% believe job availability will be better by next year.

“The Middle East has been feeling the effects of the global financial crisis for a few months now, but it is only through surveys like the Bayt.com and YouGov Consumer Confidence Index that the feelings of consumers about their financial position and that of their countries are truly revealed. In conducting this periodical survey, it exposes very interesting trends that may be expected during certain economic cycles, and it empowers HR stakeholders, professionals and other organisations with the knowledge that can help them do their part for continually improving the economic situation: financial crisis or otherwise,” concluded Zureikat.

Data for the February/March 2009 Consumer Confidence Index Survey was collected online between the period of 2nd February and 2nd March 2009 with 8,686 respondents from across the UAE, KSA, Qatar, Oman, Kuwait, Bahrain, Syria, Jordan, Lebanon, Egypt, Morocco, Tunisia, Algeria and Pakistan. Males and females aged over 18 years old, of all nationalities, were included in the survey.