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26 February 2024

Why UAE residents will spend more... and what on

By Shuchita Kapur

The confidence level of UAE residents seem to be soaring high, though pay hikes may have predominantly been in the single digits.

The belief that economy is back on track, real estate and construction sectors are booming and more jobs are being created has led to an increase in spending and this will become more evident in 2014.

More than two-thirds of working-age people believe that their spending will increase in 2014, according to a new research by deVere Group, an independent financial advisory organisation.

The findings are based on the responses from 600 working individuals between the ages of 20 and 65 who were polled in the UK, the US, the UAE, Hong Kong, South Africa, France, Spain and Germany.

And, the hike in consumer spending will primarily be on the ‘non-essentials’. When asked, “Is your spending on non-essentials likely to increase this year, compared to 2013?” majority [67 per cent of those surveyed] replied either 'considerably' or 'moderately'.

Only 19 per cent said they are ‘unlikely’ to increase their non-essential spending in 2014, whereas 9 per cent claimed their spending would fall, and 5 per cent did not know.

“Our survey highlights that, generally, people have a growing sense of financial confidence. It is a sentiment that is echoed by the World Bank, which recently increased its forecast for global growth for the first time in three years,” said deVere Group founder and chief executive, Nigel Green.

“It is this building momentum in confidence that is the probable driving force behind the expected increase in spending on things such as holidays, designer clothes and eating out in 2014.”

While Green champions the consumer spending that is among other important factors fuelling growth, the results of the poll - which undoubtedly show a level of growing optimism - come with words of warning.

“Should the extra consumption be short-term and should it lead to real growth, that is reasonable, but it is not a viable longer-term strategy for individuals or economies.

“Most people are not suddenly earning higher salaries, yet spending on non-essentials is expected to rise. This suggests that many people will fall back into pre-crash ways of running down their savings, or reducing the money they put aside each month, to fund spending,” he said.