Khaleej Times reported that most consumers in the UAE have changed spending habits to save on household expense as they still think that they are in recession.
Findings by Nielsen show that consumer confidence in the UAE declined further by 4 points from the third quarter of 2010 to 97 points in the fourth quarter of 2010, placing it in the top 15 of the Global Consumer Confidence Index. UAE’s ranking fell out of the top 10 most optimistic nations after being in top 10 consecutively for the last three quarters of 2010.
The state of the economy continues to be a major concern for UAE consumers although there is a drop in their number (18% in the fourth quarter compared to 21% in 2010 third quarter). Other concerns showing a rise among UAE consumers include children’s education and welfare, and increasing utility bills, food, and fuel prices. Interestingly, the UAE featured in the top ten of countries where some consumers (7%) had no major concerns over the next six months.
Nielsen, a global information and measurement company, said in a statement "In the UAE, 69% of consumers still think that they are in a recession, with only one third of them believing the country will come out of recession in the coming year. The survey revealed that about 68% of the UAE’s consumers have changed their spending habits to save on household expenses."
Mr Sevil Ermin MD for the Nielsen Company in the UAE said that "Consumer spending is still no where near its pre recession levels in the UAE, with many opting to allocate any remaining income, after covering essential living expenses, to savings of 46% and paying off debt of 30%. UAE consumers continued their pragmatic behavior with coping strategies that combine both essential and discretionary spending."
Measures taken by UAE consumers included the reduction of clothing and entertainment expenses, phone costs, take away meals, in addition to spending less on home entertainment and switching to cheaper grocery brands, the survey points out. The survey found that although concerns about job security in the UAE had declined from last quarter (25% in 2010 last quarter compared to 29% in the third quarter), this still remained the main concern for UAE consumers.
Consumer perceptions of local job prospects also declined in fourth quarter to 50% saying they were good or excellent compared to 54% in the third quarter. In the last quarter of 2010, consumers found themselves with less disposable income than at any other time.
The survey said that "Many consumers are still living a cautious recessionary lifestyle, which is restricting domestic spend and demand, as they brace themselves for another year of flat growth in 2011."
Global consumers ended 2010 more pessimistic than at the start of last year as hope for a global economic recovery evaporated at the end of the year with confidence levels falling in 25 out of 52 countries surveyed in the fourth quarter. Widespread concern for unemployment, job creation, rising food and utility costs gave consumers a harsh reality check and eradicated any expectation of sustained economic recovery.
(Sourced from www.khaleejtimes.com)
