Consumers slash household expenses

Some 69 per cent of consumers in the UAE still think that they are in a recession and about 68 per cent of them have changed their spending habits to save on household expenses, according to findings of the latest edition of the Nielsen research released on Tuesday.

“Consumer spending is still nowhere near its pre-recession levels in the UAE, with many opting to allocate any remaining income, after covering essential living expenses, to savings (46 per cent) and paying off debt (30 per cent). UAE consumers continued their pragmatic behaviour with coping strategies that combine both essential and discretionary spending,” Sevil Ermin, Managing Director, UAE, The Nielsen Company, said.

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 found that although concerns about job security in the UAE had declined from last quarter (25 per cent in Q4 compared to 29 per cent in Q3, 2010), this still remained the main concern for UAE consumers.

Consumer perceptions of local job prospects also declined in Q4 to 50 per cent saying they were good or excellent compared to 54 per cent in the third quarter.

The state of the economy continues to be a major concern for UAE consumers despite its decline in the past few waves (18 per cent in Q4 vs. 21 per cent in Q3 2010).

Other concerns showing a rise amongst UAE consumers include children’s education and welfare, and increasing utility bills, food, and fuel prices.

In Q4 2010, consumers found themselves with less disposable income than at any other time. 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, the survey said.

The Nielsen research also released its Global Consumer Confidence Index that showed consumer confidence in the UAE dropped 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.

Latin America was the most optimistic region at 100 points this quarter, followed by Asia Pacific at 97 points and the Middle East and Africa at 89. North America ended 2010 at 83 index points and Europe was the most pessimistic region at 78 index points.

India (131 index points) and Philippines (120) were the most optimistic nations in the fourth quarter of 2010, with Switzerland and Turkey posting the strongest confidence rebound in the year. Meanwhile, Portugal (45), Croatia (45) and Greece (52) were the most pessimistic nations. 

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