By Neeraj Gangal
Economy to fully recover in the second quarter of 2012 - Real Opinions research
The new year is expected to bring cheer to the UAE; the economic recovery is expected to start in the last quarter of 2010 and fully recover in the second quarter of 2012, according to the results of a new research.
Research conducted by the Dubai based market research company Real Opinions shows that according to consumer opinion in the UAE there emphatically has been an economic downturn for the vast majority of residents. Just 15% in the UAE believed there is no economic downturn.
Whether directly impacted by the economic downturn or a cautious attitude is adopted due to imminent fear of, average household expenditure is said to have decreased for 7 in 10 UAE residents. In percentage terms for these residents spending less, this amounted to a decrease of 26% in average household expenditure in a typical month. However, 1 in 4 UAE residents claim to not have been impacted with 19% reporting no change at all and 6% actually increasing expenditure.
Dan Healy, CEO of Real Opinions who conducted the research said in a media release on Saturday: "Back in April 2010 we reported that UAE expatriates predicted a recovery starting in the UAE by November 2010 and these latest research results back this up. This optimism back then was emphasized with the expectation that the UAE would do so the quickest globally. However, the property market is expected to play a key role in this looking forward as 7 in 10 who had invested in property claimed at the time to be in negative equity and this situation doesn't seem to have improved much since then."
The results in the countries surveyed show that this is a global economic downturn uniting all the countries.
Saudi Arabia reported the least impact upon average household expenditure with 53% claiming a decrease. However, a disparity seems to be opening up as those who did report a decrease reported the largest drop in household expenditure of all the countries surveyed with a 28% decrease. In contrast, there were 38% who reported either an increase (15%) or no change (23%).
In the UK with the highest perception that their media had actually talked up the economic crisis, there was a comparatively low 58% who claim to have decreased household expenditure and by 20% less. They reported the highest percentage claiming no change in expenditure for 1 in 4 residents (25%). The outlook is most pessimistic in the UK than in other countries, with a full recovery to the height before the downturn not expected until mid 2013.
There were 3 in 4 residents in the USA (75%) who reported a decrease in household expenditure and this was the highest of all the countries surveyed. The percentage decrease in expenditure was also a comparatively high amount of 28%. This decrease of 28% closely matching the percentage reported in Saudi Arabia but with it having a wider impact on 22% more USA residents.
The research was conducted using an online research methodology in each of the countries. The number surveyed in each country was All (1,568), UAE (306), Saudi (257), UK (213), USA (253), Russia (354) & Germany (185). At a total level, the margin of error of results is calculated at approximately +/- 2.5% with a CI of 95%, Real Opinions said in the media note.
This report, although interesting from a mind set point of view, does nothing but produce a report based purely on the opinions/sound bites of the people asked. It does not take into account the reality of the economic environment and what has to be achieved globally before a recovery can get underway. It doesn't even take into account if the people questioned have any real understanding of what economic environment they are living through and how deep it is. Asking people if they have cut back on spending tells only a small story. You could say those that have pulled back their spending have been impacted directly and are poorer than those that haven't. The wealthier people may not have pulled back their spending because they haven't been impacted to date. Maybe they are currently ringfenced from the crisis. Maybe if the recovery doesn't come by 2012 these wealthier people will start to cut back on their spending... Unbridled optimism can be such a dangerous mental state. Everyone, allegedly, expects a recovery in Nov 2010...but that figure was bantered in late 2008 early 2009. It was a figure that appeared 'viable' so it was embraced. Ask people now what they think...and they'll probably think end 2011/beginning 2012. Its nothing more than a mentally acceptable timeline for a recovery. My point is NO ONE wants to accept a timeline for recovery of more than 2yrs into the future. Its human nature. However, when you actually look at the data and underlying data you find that in all reality, a recovery could be 5-10yrs away. NO ONE wants to admit to a 5-10yr recovery...but the real economic data points to it. The UAE CAN NOT recover by 2012 unless the rest of the world recovers first because UAE depends too much on global trading and inflow of international money. The economics are much, much more deeper than just this paragraph but you only have to do a little bit of research to see that the mainstream global media are marginalising the 'real truth' and towing a political 'recovery line'. Based an optimistic outlook...I'd hope to see a recovery by 2012. Based on the data and real economic situation I'd suggest a recovery 5-10yrs away. That as not negative, its a realistic outlook based on economic fact. My 2012 outlook is based on hope not facts. There is a real difference...