Consumer confidence in the UAE dropped during the third quarter of 2018, as more UAE residents reported worrying about keeping up with a rising cost of living
That’s according to the Consumer Confidence Tracker Q3 from yallacompare, the Middle East’s leading comparison site. During the third quarter of 2018, the Tracker polled 1,469 UAE residents on their finances. It follows similarly sized surveys conducted in the first and second quarters of the year.
The Consumer Confidence Tracker Q3 reveals that 52.6% of UAE residents are now less confident about their finances than they were 12 months ago. That’s compared to 41.2% who said the same thing in the second quarter of the year.
Moreover, the Q3 Tracker recorded a major increase in the number of UAE residents worried about not being able to afford any rise in the cost of living in the country. Over half (51%) said they are worried that they will not be able to get by if the cost of living rises – a 10-percentage-point increase on the number of people who said the same thing in the second quarter of the year.
The Q3 Tracker also revealed that more UAE residents are struggling to cope with the increase in costs related to the introduction of value-added tax (VAT) at the beginning of the year. Over a quarter (26.9%) said that they are now struggling to make ends meet, compared to 13.9% in the second quarter of the year.
“The increase in the number of people reporting financial strife is alarming when compared to the first two quarters of the year, which saw relatively flat levels of financial confidence. However, we believe that these numbers are likely seasonal,” said Jonathan Rawling, CFO of yallacompare.
“Anecdotal evidence – plus the data from other surveys we’ve conducted – suggests that the summer quarter is an expensive one, particularly for families with children. Not only do holidays need to be paid for, but so too do back-to-school expenses. That will naturally put a strain on many UAE residents’ finances.”
Indeed, as has been the case in previous quarters, UAE parents continue to pay more for school fees. Over 83% are now paying more for school fees than they were 12 months ago – the recently announced school fee cap notwithstanding.
As a result of these additional expense, UAE residents are struggling to maintain their financial commitments to remittances and savings funds. While 88.4% of UAE residents regularly sent money back to their home countries in the third quarter of 2018, almost 40% are sending less home than they were last year. Just 30% said they were sending less home during the second quarter of the year.
The same story can be seen when it comes to savings accounts. In the second quarter of the year, 43% said that they regularly save a portion of their salary every month. However, in Q3, just 37% reported regularly saving money. What’s more, 65% said that they are saving less than they were 12 months ago, compared to 55% who said the same thing in Q2.
Despite this lack of financial confidence, UAE residents remain confident about their careers. Job confidence remained stable quarter-on-quarter, and 62% of respondents expect a salary raise in the next 12 months.
“Because of overall job confidence remains strong in the UAE, expat residents continue to regard the country as more attractive for working in than their home countries would be. The vast majority (65.7%) are either less likely, or as likely, to leave the UAE based on their financial health than they were at this time last year,” said Rawling.
Meanwhile, the savings promised by lower property rental rates across Dubai and Abu Dhabi continue to elude the majority of UAE residents. According to yallacompare’s Consumer Confidence Tracker Q3, almost half (47.1%) are paying more in rent than they were 12 months ago. That’s compared to 39% who said the same thing in the second quarter. Of those paying more rent, the majority (52%) are paying 5% to 10% more than they were last year.
“As we found in our previous report on rental rates, it appears that lower prices are only being applied to new property listings. Those who are staying put under existing contracts – who represent the majority of the population – aren’t seeing the benefits of these reduced prices,” said Rawling