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GCC consumers are more upbeat about future economic situation

Dubai - In the UAE, overall, consumer confidence declined by 1.8 per cent in December to 76.2 per cent, compared to November’s series high of 78 per cent

GCC consumers have become more optimistic about the future economic situation in the region, despite slight declines in consumer confidence surrounding business and employment as result of the ongoing challenges of the pandemic.

Amid a general decline in net positivity across all global markets, the GCC’s Arab population remained mainly immune to many of the global agitators regarding business, economy and employment confidence, according to research by leading consumer intelligence platform, D/A, owners of Sila, an Arabic-native, AI-enabled consumer intelligence platform.

The data, which is based on algorithmic AI analysis of over 100 million Arabic social media posts, was highlighted in the December 2021 Sila Consumer Sentiment Index (CSI) report, which was released on Tuesday. The data revealed that the GCC remained relatively immune to the key issues affecting consumer sentiment on a global level.

Overall, GCC consumer confidence in December declined 1.2 per cent, down to 65.3 per cent from 66.5 per cent in November and 66.3 per cent in October. These modest declines are attributed to global dynamics, including inflationary pressure on consumer spending, uncertainty around variants of Covid-19 and the resulting impacts on daily life, and government support for the economy via maintained spending and reforms.

Business confidence has sustained a more considerable setback of almost 2.0 per cent month-on-month, from 61.3 per cent in November to 59.5 per cent in December. However, it is still registering net positivity and trending above pre-pandemic levels.

Paul Kelly, managing partner of D/A, said there has been a clear uptick in consumer confidence from an economic perspective. The extensive vaccination programme across the region has undoubtedly had a positive impact, and consumers have become more optimistic about the future economic situation in the region. “This confidence does, however, have to be tempered by the slight declines in consumer confidence surrounding business and employment in the GCC, as result of the ongoing challenges of the pandemic.”

In the UAE, overall, consumer confidence declined by 1.8 per cent in December to 76.2 per cent compared to November’s series high of 78 per cent.

Confidence in private enterprise has experienced a decline from 76.8 per cent in November to 75.2 per cent in December – an increase in negativity of 1.6v, which is considered relatively substantial in a UAE context.

The UAE decline can be attributed to the emergence of the Omicron variant. Consumer sentiment regarding the UAE economy saw a marginal decrease in positivity from November's figure of 61.8 per cent to 61.7 per cent in December, reflecting the public uncertainty around Covid-19. Evidence has also shown that price increases are a concern in the economy.

The employment index in the UAE sank by 2.4 per cent from November’s strong rating of 87.6 per cent to 84.9 per cent in December – a statistically significant reading because it represents the largest decline since the emergence of Delta strain in December 2020.

“While apprehensions related to Omicron have driven a net decrease in positivity, they have proven to be less damaging when compared to past variants. Although the result is overall a more positive outlook this time around, it remains to be seen how the UAE economy will fare moving forward,” Kelly said.

From an economic perspective, macro/government intervention in GCC economies saw a 3.7 per cent increase in confidence in December, marking a two-year series high in economic growth sentiment, a significant consumer confidence indicator.

Consumer confidence around employment declined by 1.3 per cent month-on-month to 81 per cent in December and 1.5 per cent below October’s reading of 82.5 per cent. This trend still presents a significant shift from the pre-pandemic level of 87.9 per cent recorded in February 2020 and the 86.1 per cent noted in June 2021, indicating a more inconsistent recovery concerning this marker.

issacjohn@khaleejtimes.com