• Home
• /
• Economy
• /
• Business

Rising consumer confidence set to drive UAE economy

Consumer spending has remained strong throughout the pandemic period despite volatile global macro-economic environment and similar trend is expected to continue this year

The UAE's consumers are becoming more confident and spending more that will fuel growth in the economy despite rising inflation and interest rates worldwide, experts say.

Analysts, corporate executives and business consultancies said the UAE market stepped up its activities very fast to drive through the impact of the Covid-19 pandemic. They said consumer spending has remained strong throughout the pandemic period despite volatile global macro-economic environment and similar trend is expected to continue this year.

Saad Manair, senior partner at Crowe UAE, said the UAE residents are in a better position than certain other Western countries to manage the effect of inflation, provided they plan and manage their finance in a proper manner and be modest in their spending.

"The UAE consumers have been generally extravagant in their spending, and they need to be smart in how they deploy their earnings," Manair told Khaleej Times.

Hatem ElSafty, chief executive of Business Link, said the UAE's consumers are becoming more confident and spending more, fuelling growth in the economy and signalling a bright future for the country's businesses.

"With more disposable income and a desire for the latest technology and trendy products, consumers are becoming increasingly willing to spend, boosting the overall economy," he said.

Pent-up demand continues to shine

In a recent research by leading management consulting firm Kearney, the UAE consumer spending power remains strong despite concerns about the global macro-economic environment as they do not expect to reduce their spending over the next six months.

"While price increases have been noted across most retail categories, about 16 per cent of consumers have reported an increase in spending on non-essential items compared to 2021. Over half, 56 per cent of the consumers, are planning to spend on a major household purchase (Dh1,000+) in the next six months," according to the research.

Ravi Krishnan, general manager at Ascent Partners, said pent-up demand from pandemic times continues to shine through.

"Consumers, who embraced e-commerce during the pandemic, continue to make robust online purchases, while at the same time boosting retail purchases thanks to a renewed appreciation for brick-and-mortar shopping experiences. This might explain the strong consumer sentiment even in the context of increasing prices,” Krishnan told Khaleej Times.

Robust spending power

Sameer K Mohamed, managing director, Jaleel Holdings, said, the global financial sector challenges have not impacted the UAE economy as much as the rest of the world due to several reasons.

"Although, prices have increased for almost all products across the market in the UAE, the spending power of consumers has remained robust due to the increase in their revenue compared to the consumers in other markets of the world. This is because the UAE economy has remained stable despite the challenges of the Covid-19 pandemic. The lives of the residents have not been affected by the pandemic as it was in other markets with job losses and revenue cuts," Mohamed told Khaleej Times.

"The UAE market stepped up its activities very fast to drive through the impact of the pandemic while maintaining the standard protocols and gradually easing the restrictions. In fact, the UAE market leveraged the situation by upping its game to maintain consumer spending power. This has positively impacted the economy without major government interference in the market," he added.

Abdul Jebbar, group managing director, Hotpack Global, said consumer spending has remained strong throughout this current global macro-economic environment despite the challenges.

"In fact, consumers have accumulated more wealth through the pandemic than before as they have not had the same opportunities to spend it. One of the ways retailers took advantage of the increased spending power for consumers is by adopting an omnichannel model, taking advantage of the rise of e-commerce in recent years," he said.

"It also enabled retail store expansions, special offers and discount campaigns, and other channels to reach consumers. Consumers today are also more conscious of their carbon footprint than before. They are willing to pay a higher premium for sustainable and eco-friendly products even during the current economic climate,” Jebbar said.

Jobilal M Vavachan, chief executive of Life Healthcare Group, said the UAE residents' spending power remained strong in challenging times and they are still eager to spend more on personal well-being.

“We understand that the lives of consumers in the UAE have remained unaffected compared to other countries, so the consumer spending has remained strong despite supply chain concerns. We observe that residents in the UAE are concerned about their health and well-being and they place immense focus on their personal well-being and are highly motivated to invest in self-improvement, whether it is through changes in their lifestyle or other means," he said.

"At Life Pharmacy, we were able to address the supply chain issues to a large extent, through proper planning and forecasting. We also absorbed the increase in costs, so that the end consumer did not have to spend more,” Vavachan concluded.

— muzaffarrizvi@khaleejtimes.com