Consumer confidence in the Middle East has taken a blow, with the recent poll conducted by Bayt.com and YouGovSiraj, showing a significant dip in the propensity to spend.
The3rd Bayt.com Consumer Confidence survey, conducted in conjunction with market research leader YouGovSiraj, reveals an increasing reluctance to spend. Consumers are increasingly unsure about their expenditure in the face of rising living costs and a slowdown in some of the regional economies. Optimism remains however amongst consumers who believe the situation will improve in the next few months.
The Bayt.com Consumer Confidence Index is a quarterly survey of consumer attitudes. It measures views on the current and future state of regional economies, personal finance, saving, decisions to make investments and the employment market.
The survey polled more than14,000 adult respondents across the GCC, Levant and North Africa over a three-month period. The figures have been compared with the results set in the April survey. During the April wave of research consumer confidence was higher than it is today.
Questions explored respondents’ attitudes towards their financial and job situations, their likelihood to purchase and invest, and the region’s employment market. The survey reveals a broad range of attitudes according to country of residence, nationality, type of organisation and income bracket.
This time, the Index showed some startling trends: • Saudi Arabia, Qatar and UAE are showing greater decline in consumer confidence with the figures standing at88.9,91.6 and93.4 points respectively, declining from the benchmark100 points. This indicates an11.1 point decline in Saudi Arabia,8.4 in Qatar and6.6 in the UAE, compared to April,2007. • Consumers in Saudi Arabia (85) Kuwait (88.8), and Qatar (88.8) showed a more pessimistic attitude towards spending. This is a significant decline from July2007 – an18.8 point decline in Saudi Arabia and a12.4 and11.7 point decline in Kuwait and Qatar respectively. There was also a corresponding9 point decline in the UAE compared to July. • Qatar, Saudi and UAE residents also showed a great decline in their optimism about their financial future and career growth. The percentage of respondents who felt their financial position will be better after a year’s time was reduced by13% in Saudi Arabia followed by8% in the UAE and7% in Qatar from the July scores. On the career growth front, the proportion of highly satisfied respondents shrunk by8% in Qatar and4% each in Saudi Arabia and UAE. • Impact of inflation on business has increased with more people consequently pessimistic about growth of business. In comparison to April,8% fewer respondents in the UAE were optimistic about positive change in business conditions while4% more respondents admitted to the negative impact of inflation on their business. • Overall rising concern about salaries not being able to match the growing inflation. As compared to the April benchmark, an additional4% of respondents in the UAE agreed that their salaries had not kept pace with living costs.
Moreover the survey results show a significant increase in the number of people who felt that their salaries had not kept pace with their cost of living, with the UAE respondents being the largest group at66 per cent.
Rabea Ataya, CEO of Bayt.com, confirmed the results of the survey would be an invaluable resource to business leaders, economis ts and the general public. “While consumer confidence is resilient overall, consumers are wary about the rising costs of living and are exploring ways to rein in their expenditure,” he explained.
“With end of year appraisals, salary revisions, as well as continued discussion about currency pegging in the region, the end of year is generally an uncertain time for professionals. We look forward to seeing how matters develop in the coming year and see no fundamental reasons for sustained or prolonged pessimism,” he added.
Commenting on the survey, Nassim Ghrayeb, Chief Executive Officer, YouGovSiraj says, “There is no question that this has been a tumultuous year. A number of factors have put pressure on the regional consumer, continued inflation and the continually declining dollar. People have not been doing badly but at the year end there is a sense of pessimism towards finances. With out a significant economic shift, we may even see a drop off in spending next year.”
The Consumer Confidence Index is being conducted on a quarterly basis and complete results can be accessed online on Bayt.com.