UAE consumer confidence takes hit

CONFIDENCE HIT: Optimism over income, employment and stock markets or first half of 2008 has dipped, the study showed. (Getty Images)

UAE consumer confidence for the first half of 2008 has fallen sharply, with optimism over income, employment and stock markets taking a significant hit, MasterCard said on Tuesday.

A recent study by the credit card firm has revealed the UAE's consumer confidence index rating has cooled almost 10 points from the second half of last year to 78.5 (out of a possible 100), with indicators dipping across the board.

The outlook for regular income suffered the worst of the five major indicators contributing to the consumer confidence index, sliding more than 20 points from 92.2 in the second half of 2007 down to 70.3.

Confidence also waned toward the economy (from 96 to 86.1), employment (from 95.2 to 85.6) and stock markets (from 81.5 to 73.4).

Sentiment towards the quality of life remained the most resilient, falling only a few points from 79.1 to 75.9.

The UAE’s rating was well behind regional neighbours Kuwait, with an overall index rating of 93.3, and Saudi at 92.2.

Both registered increases in their consumers' sentiment, despite factors such as the global credit crunch and a potential recession in the US, the world’s largest economy.

Despite the downturn in confidence in the UAE, Nasser Saidi, chief economist of the Dubai International Financial Centre (DIFC), remained upbeat about the future.

“The index survey participants are generally optimistic about the prospects for the economy, employment, their regular income, the stock markets and the quality of life in the countries of the region,” Saidi said.

“Our region is proving resilient to uncertainty and volatility in the credit and financial markets of the US and Europe as a result of the US subprime and mortgage market crisis."

Although the outlook remains overtly positive for the UAE, Saidi did add that inflation was somewhat of a concern for residents in the Emirates.

“…for the UAE consumer sentiment has been affected by inflation which has impacted household budgets and real income,” Saidi said.

The study, commissioned by MasterCard and conducted bi-annually, analyses consumers' perceptions of economic conditions over the six months ahead.

The survey scores, ranging from 0 to 100, are based on responses on five variables: employment, economy, regular income, stock market and quality of life.

The markets surveyed are Egypt, India, Kuwait, Lebanon, Saudi Arabia, South Africa and the UAE.

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