Middle East consumer confidence improving, says survey

Consumer confidence levels across the Middle East has showed a positive increase, according to a survey conducted recently.

Residents across the UAE are feeling a marked improvement in economic conditions, as consumer confidence rose for the second time this year, revealed  the latest Consumer Confidence Index (CCI), a quarterly survey conducted by Bayt.com, a leading Middle East’s job site in conjunction with research specialists YouGov.

The survey revealed that the UAE moved up the index by 9.3 points, continuing the country’s course of improved consumer confidence from the last quarter.

Respondents in UAE felt certain features of their economic positions were unchanged from the previous year. More than a third of respondents, 34 per cent, felt that they were in the same financial position as last year, while the same number agreed that their country’s economy was unchanged. Unsurprisingly, respondents are optimistic about the future. Almost half of respondents, 48 per cent, said that they believe business conditions will be better, and 40 per cent said they think their country’s economy will improve in a year’s time.

Confidence in Kuwait rose the highest among the surveyed countries with an increase of 10.0 points, and as in the previous wave, Kuwait and the UAE retain the two top spots in terms of improved confidence.

While Qatar followed with a strong increase of 9.0 points, the picture around the rest of the Gulf varied, with an increase of 5.1 points in Bahrain and 3.4 in Saudi Arabia.

Despite being one of the only countries in the Middle East to record a consistent improvement in consumer confidence over the past year, Lebanon in this wave was the only country to deteriorate, moving down the index by 0.7 points. By comparison, Syria showed a significant improvement of 5.6 points.

In North Africa, Egypt and Morocco topped the table in terms of improved consumer confidence, moving up 7.7 and 6.7 points respectively, contrasted with a move up the index of just 2.6 points in Algeria.

The Consumer Confidence Index (CCI) is a measure of consumer expectations and satisfaction of various elements of the economy including inflation, job opportunities and the cost of living.

“While we are not seeing massive jumps up the index, the data shows that there are steady improvements, which reflects what is being reported and felt in economies around the region– namely that things are starting to pick up,” commented Amer Zureikat, Bayt.com’s regional manager.

“Improvements in the index have been seen in countries in the Middle East for around six months now, so the real test as to whether consumer confidence is being sustained and improved as a result of the easing of the recession, will become evident over the next year or so.”

The CCI is in part gauged by asking the respondents about their personal financial situation, and whether they feel that they are better, or worse off than 12 months ago. In the UAE, 21 per cent of respondents said they are better off than last year, while a slightly lower 40 per cent of respondents said they were worse off – the highest figure amongst all surveyed countries.

Around the region, respondents in Qatar recorded the most positive improvements in their financial positions: 35 per cent stated their position was better than last year. The other countries in the GCC reported slight improvements in personal finances: 29 per cent in Saudi Arabia and 26 per cent in Bahrain stated they were better off. Following the UAE, and in line with the results of the last wave, respondents in Jordan were similarly hard hit in terms of their personal finances, with 39 per cent stating they are worse off.

Consumer confidence is also assessed by asking the respondents about their consumer expectations and their level of optimism towards the future. While not such a huge increase as in the previous wave, consumer expectations improved in each of the surveyed countries with the exception of Lebanon, which stayed the same.

As in the previous wave, the UAE was the country that improved the most, moving up the Consumer Expectations Index (CEI) by 8.6 points, closely followed by Qatar, which moved up by 8.3 points. Kuwait also followed suit, with an improvement of 7.0 points. Bahrain and Saudi Arabia showed the lowest improvements among the GCC countries, moving up 5.1 and 3.1 points respectively.

In North Africa and the Levant, Egypt improved the most in terms of consumer expectations, moving up by 6.1 index points, closely followed by Syria at 5.4 points and Algeria at 4.0.

Optimism for the future was found to reign supreme with many of the region’s respondents. Almost half of respondents, 46 per cent, said that their personal financial position would change for the better in a year’s time, and only 8 per cent said that it would be worse. The UAE’s respondents were only slightly below the average, with 45 per cent stating their position would be better. Most optimistic among those surveyed were respondents in Bahrain: 52 per cent said their finances would be better after a year.

Respondents also felt positive that their country’s economy would improve in a year’s time; 40 per cent said that it will be better, compared to just 19 per cent of those that said it would become worse. While Kuwait topped the table – 51 per cent of respondents said their economy will be better – the UAE was also near the top: 49 per cent stated that things will be better. By contrast, only 14 per cent said that things would become worse. Respondents in Saudi Arabia and Qatar were similarly positive, 47 per cent and 46 per cent expected things to be better after a year.

When asked whether  it is a good time to buy consumer durables or not, respondents once again stated they are reluctant to spend: 42 per cent said it was a bad time to buy goods such as televisions or refrigerators, 30 per cent said it was a neutral time, while a fifth agreed that it was a good time to buy.

The survey showed that propensity to consume (PCI) varied from country to country. Moving highest up the PCI by 13.2 index points was the UAE, highlighting a second significant improvement after the country’s jump of 12.6 index points in the previous wave. Kuwait and Qatar also showed significant improvements in propensity to consume, moving up the index 11.1 and 9.4 points respectively. Unlike the previous wave when it showed an improvement, Algeria moved down the index by 5.1 index points – the largest decrease among the surveyed countries. In this wave, Lebanon, which previously witnessed a drop, moved up the index by 3.0 as did Syria by 2.3 points.

“The results show that while customers feel they are in a better financial position, they are still reluctant to part with their money for higher-end consumer items, which suggests that consumers are being cautious – perhaps until economic improvements look as though they are here to stay. In that regard, this data can serve as a useful milestone to measure the changes in consumer spending habits over time,” said Joanna Longworth, chief marketing officer, YouGov.
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The Employee Confidence Index (ECI) is a general measure of how people feel about the local job market and highlights their current attitudes towards availability of jobs and salary satisfaction. The UAE showed a positive improvement in this index, moving up by 6.0 points, following from the improvement of 8.1 index points in the previous wave. Showing the most improvements were Qatar and Syria, which moved up by 10.6 and 9.6 points respectively. The picture around the Gulf was also positive: Kuwait and Bahrain moved up by 6.8 and 6.1 index points, while Saudi Arabia showed a less remarkable increase of 2.1 points. As in the previous wave, Lebanon saw a drop in employee confidence, this time by a higher 2.0 index points, while Algeria moved down by 1.3 points. The rest of the surveyed countries all showed improvements.

“In general, the employee confidence index shows that employees feel that their respective labour markets are picking up, with the exception of Lebanon and Algeria. This suggests that recessionary pressures are still being played out in those economies,” commented Longworth.
“This data, coupled with ongoing news reports of the global economic downturn coming to an end, suggest that conditions are already better for employees.”

Following on from improvements in the previous wave, a greater proportion of respondents believe that more jobs will be available in a year’s time. Just 28 per cent of all respondents said they feel that job availability will be worse, compared to 33 per cent in the last wave; while 30 per cent of respondents said conditions would be better. Feeling most positive about the future availability of work were respondents in Qatar (43 per cent), Kuwait (42 per cent) and the UAE (40 per cent) who said things would be better after a year. Those feeling pessimistic about the future availability of work were respondents in Egypt and Jordan: 34 per cent in each country said job availability would be worse after a year.

As in previous waves, respondents feel that salary increases have not kept pace with the cost of living. The majority, 60 per cent, said that they haven’t kept pace, while 17 per cent feel they have increased in line with the cost of living.

“Conducting quarterly surveys to gauge levels of consumer confidence presents us with indications about how people are really feeling about many consumer confidence indicators; from whether they consider their salary to be sufficient, how positive they are feeling about the future and whether they feel they are in a position to spend money,” stated Zureikat.

“We therefore want to use this data to enable regional businesses, HR professionals and other relevant industry stakeholders to be up-to-the-minute with these market trends. Taking a purposive approach to the data will ultimately serve to benefit the businesses or organisations of those that use it – enabling them, for example, to retain customers or keep employees happy. In so doing, these steps could prove vital to their organisations’ health in the long term.”