Yallacompare survey reveals that nearly 14% are struggling financially as a result of cost increases related to the introduction of VAT
Levels of consumer confidence held steady in the UAE during the second quarter of 2018, despite a slightly larger number of residents reporting that they are struggling to make ends meet, according to new research.
Yallacompare’s Consumer Confidence Tracker for Q2 - based on a survey of 1,347 UAE residents - revealed that 41.2 percent are less confident about their financial health than they were this time last year.
That compares to 42.9 percent of UAE residents who said the same thing during the first quarter of the year. Just over 19 percent of UAE residents are currently more confident about their financial health than they were 12 months ago, a similar level as in Q1.
These steady levels of consumer confidence come despite the fact that more UAE residents reported struggling to make ends meet during Q2 than in the previous quarter, the survey showed.
The tracker found that 13.9 percent of UAE residents are now struggling to make ends meet as a result of cost increases related to the introduction of value-added tax (VAT) in the UAE. That’s compared to 11.9 percent who said the same thing in the first quarter of the year.
The majority of respondents (52.2 percent) in Q2 said that they are getting by, but have had to make spending cuts as a result of the introduction of VAT while in Q1, 58.3 percent said the same thing.
“The additional people who reported that they are struggling to make ends meet in Q2 were made up almost entirely of those who were managing to get by, despite making spending cuts, in the first quarter of the year. This suggests that the increased costs of living associated with the introduction of VAT are hitting some UAE residents harder than was likely envisioned,” said Jonathan Rawling, CFO of yallacompare.
Despite the increased cost of living affecting more people, expat UAE residents reported that they are no more likely to leave the UAE due to their finances than they were in the first quarter of the year.
The tracker found that only 22.8 percent are more likely to leave the UAE (24.4 percent in Q1), and 41.5 percent are less likely to leave (42.2 percent in Q1).
Yallacompare said this suggests that UAE expats are still more confident about their relative prospects in the UAE than in their home countries.
The survey also revealed that almost 35 percent of respondents reported seeing a salary raise over the past 12 months, and overall job confidence increased by 4.4 percent over the previous quarter.
“This could lead to a softening of the pressures that consumers are facing – indeed, we may be starting to see the light at the end of the tunnel. A raft of new stimuli from the government, announced during the quarter, has likely boosted business confidence, which may allow employers to begin matching salaries to the increased cost of living,” said Rawling.
“And while slightly more respondents said that they are struggling to make ends meet, levels of debt are falling, and there has been an increase in remittance rates. This suggests that the way consumers were allocating their resources in the first quarter of the year may be changing again. People are paying down their debts and sending more money home,” he added.
In terms of remittances, the survey showed that 36.8 percent of respondents are now sending more money home than they were last year while 48 percent reported having less credit card debt now than they did 12 months ago.
The survey also showed that UAE residents are not, on the whole, benefiting from the reported softening of the country’s property rental market. Just 20.4 percent are currently paying less in housing rent than they were 12 months ago.
UAE parents said they also continue to struggle with the increasing cost of school fees with over 80 percent paying more in school fees than they were 12 months ago.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.