Amid the global financial and stock market turbulence of the past six months, consumer confidence in the Middle East as a whole remains unscathed and continues to be fairly optimistic, according to MasterCard Worldwide Index of Consumer Confidence.
The index in the Middle East, which currently stands at 72.7, shows that consumers have in fact become a little more optimistic than a before (66.4) and slightly less so with the optimism of year ago (73.6) and the Middle East historical average (76.0), revealed the data provided by MasterCard. The survey shows that UAE consumers continue to remain optimistic, especially about regular income [91.6], the economy [83.2] and the quality of life [76.7].
They are somewhat more optimistic about the stock market [68.3] than they were before [65.2] and a year ago [73.4].
Consumer outlook on employment [57.0], though positive has seen a significant drop, from 95.8 before and 85.6 a year ago; representing the lowest index score for measurement of employment in the UAE since the beginning of the index in first half of 2004.
Dr Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide, said: "In spite of the global credit crisis, the GCC markets are in a strong position to weather the economic storm.
"In the short-term, the GCC governments have the financial wherewithal to provide the necessary fiscal stimulus to support continuing economic growth to mitigate the worst of the impact; but more importantly, the investment made in recent years in infrastructure and capacity building will bear fruit in the coming years.
"The question of whether the GCC markets may suffer from a technical recession in 2009 is not the critical issue; the fact today is that their economies are grounded on a much more robust and sustainable foundation than ever before."
As far as consumer confidence in the UAE is concerned, it stands at 75.4, a drop from before [85.4] and a year ago [78.5].
It is also below the market historical average [83.5]. Comparing the purchasing priorities of the various countries in the Middle East, consumers in the UAE are spending less (21 per cent to 30 per cent) than other countries.
On the other hand, a majority of consumers in the Middle East are spending between 41 per cent and 60 per cent of their total annual household income on household expenses, said the report. A majority of consumers in the Middle East do not believe their expectations on the increase in inflation will affect their spending.
However, consumers in the emirates are expectd to cut back on their spending.
Looking at areas to spend money, majority of consumers in the Middle East are expecting to spend on their children's education and dining entertainment in the next 12 months ahead.
In the UAE, however, consumers saw property and renovations, fashion and accessories and dining and entertainment as main areas they would spend on.
The report shows that saving is another priority of consumers.
"Nearly half of the respondents in the Middle East believe saving is important, with a majority of consumers planning to save between 11 per cent and 20 per cent of their total income in the next 12 months. In the UAE, saving is also a top priority with a majority of the consumers planning to save between 11 per cent and 40 per cent of their income in the coming 12 months.
Over the 12 months ahead, both males and females across the Middle East equally expect to save between 11 per cent and 20 per cent of their total income."
As far as other countries in the region are concerned, consumer confidence remains fairly very optimistic. In Saudi Arabia it stands at 72.4 and Qatar at 76.2. However, current consumer sentiments are lower than a period ago and a year ago.
The overall decline in the Index in Qatar and Saudi Arabia is due largely to erosion of confidence in the stock market, which as it stands now, is slightly pessimistic, the report mentions.
Kuwait [96.6] hits a new high surpassing all previous records. In fact, the current Index of 96.6 surpasses all others, be it before 89.4, a year ago 93.3 or the market's historical average of 92.1.
Lebanon [69.1] and Egypt [55.6], on the other hand, have made a remarkable recovery from their rather pessimistic outlook from the previous Index to an optimistic position in the case of the former and a slightly optimistic one in the case of the latter, which was actually boosted by the surge of consumer confidence in Alexandria [72.8].
The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities are based on consumer surveys conducted by MasterCard across seven markets in the Middle East and Africa.
A total of 3,200 consumers were surveyed between October 14 and November 11 2008.
Data collection was via personal, telephone and computer aided telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary.
The index is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities comprise part of the MasterCard Worldwide Index suite of research products in the Middle East and Africa.
The other MasterCard Worldwide Index research products include the MasterCard Worldwide Centres of Commerce and the MasterCard Worldwide Emerging Markets Index.