Almost half of UAE residents are less confident about their financial health than they were 12 months ago, but remain more confident about their prospects in the UAE than anywhere else, said a new report.

The quarterly Consumer Confidence Tracker from yallacompare, a leading comparison site in the Middle East, is based on a survey of 1,441 UAE residents, and follows on from a similar survey conducted in the fourth quarter of 2017.

The Consumer Confidence Tracker Q1 2018 reveals that 42.9 per cent of UAE residents are less confident about their financial health than they were this time last year. Just 19.3 per cent are more confident about their financial health than they were in Q1 2017.

Despite this, only 24.4 per cent are more likely to leave the country as a result of their financial health over the last 12 months, and 42.2 per cent are less likely to leave the country for the same reason. This suggests that, while confidence may be falling, UAE expats remain more confident about their prospects in the UAE than in their home countries.

“Our Consumer Confidence Tracker shows that, while consumer confidence may not be particularly high right now, UAE residents still see the country as a place of opportunity. What’s more, the tracker shows that, while UAE residents may worry about their prospects, most appear to be taking steps to improve their financial health,” said Jonathan Rawling, CFO of yallacompare.

“A series of indicators on the tracker show a general lack of confidence around job security, the ability to keep up with the cost of living, and the prospect of a salary raise. This means that UAE residents are now allocating their resources differently, based on their confidence levels. For example, rather than saving and/or sending money home, they’re paying down debts. And rather than moving to bigger properties, they’re staying put. As a result, we can actually infer a greater level of financial prudence among UAE consumers.”

In terms of the indicators, 37.3 per cent are worried they will be unable to get by as the cost of living rises, while 53.3 per cent are slightly worried. Just 8 per cent report to not be worried at all.

UAE consumers are also less confident about keeping their jobs compared to the previous quarter. Now, 26.9 per cent of people are not confident about keeping their jobs for the coming 12 months, compared to 19.6 per cent of people not being confident about keeping their jobs in Q4 2017. Year-on-year, 38.3 per cent of people feel less secure in their job than they did this time last year.

Slightly fewer people now expect a salary raise in 2018 than in the fourth quarter of 2017 – 60.7 per cent in Q1 2018 compared to 62.3 per cent in Q4 2017. And 15.9 per cent expect a pay cut over the next 12 months – about the same as the number recorded in Q4 2017.

The tracker did reveal, however, that the worst fears around the implementation of value-added tax (VAT) have not been realised. Only 12 per cent of people feel that the impact of VAT has been such that they’re now struggling to make ends meet. This compares to Q4 2017, when 44.6 per cent of people were worried that the implementation of VAT would mean they would struggle to afford the associated increase in prices. Indeed, 29.8 per cent reported in Q1 2018 that they have barely notice the additional cost of VAT. 

Contrary to perceived wisdom, UAE residents are not paying less rent than they were last year. And this is not because people are moving into newer or bigger properties – 69.1 per cent haven’t moved in the last 12 months, while 67 per cent aren’t planning to move at all. And 22 per cent actually say they plan on downsizing to save on rental payments.

All of these factors have combined to change spending habits among UAE consumers, who are now allocating their resources differently.

For example, UAE residents are sending less money home than they were last year. Of the 81.3 per cent of UAE residents who regularly send money to their home countries, 35.9 per cent are sending less than they did 12 months ago, while 33.5 per cent are sending the same amount as they were last year. Just 30.6 per cent are sending more money home.

The same goes for saving. The majority (58 per cent) of UAE residents fail to habitually save a portion of their monthly salary. And of those who do, 58.9 per cent of people are saving less than they were last year. Just 15.8 per cent are saving more than they were 12 months ago.

However, this has freed up capital so that UAE residents can pay down their debts. For the first quarter of 2018, 42.4 per cent claimed to have less credit card debt than they did at the same time last year, and 46.8 per cent of people have less loan debt than they did last year. About a third report having the same amount of credit card and loan debt, and just 20.7 per cent have more loan debt than they did last year.

Elsewhere, of those who pay school fees, 81.6 per cent of UAE residents have seen an increase in fees. And 54.1 per cent of parents would consider sending their child to a different school in order to save money on fees. – TradeArabia News Service