UAE Consumer Confidence Dips, But Remains Net Positive: Report
Consumer confidence in the UAE dipped to 70.9 per cent in February, however, it is expected to rebound quickly because of long-term consumer optimism surrounding the country’s economy, said a research report. The latest research by leading consumer intelligence company, D/A, has revealed the UAE witnessed a 3.1 per cent decline in consumer confidence in […]
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Consumer confidence in the UAE dipped to 70.9 per cent in February, however, it is expected to rebound quickly because of long-term consumer optimism surrounding the country’s economy, said a research report.
The latest research by leading consumer intelligence company, D/A, has revealed the UAE witnessed a 3.1 per cent decline in consumer confidence in February, down to 70.9 per cent.
However, the decline is expected to be short-term as early indicators point to a return to growth as sentiment across the economy, business, and employment improve.
The decline in UAE consumer confidence, the first time since January 2021, appears to have been driven by the news surrounding private company income tax.
Both business and the economy witnessed a decrease of 2.1 per cent and 8.5 per cent, respectively, the latter denoting the most significant reduction since the onset of the pandemic.
Macroeconomic policy reform
Paul Kelly, Manager Partner D/A, said: “After a substantial period of sentiment increase, there has been a short decline on the back of macroeconomic policy reform in February. However, February’s reading of 70.9 per cent remains well into net positivity territory for the overall index.
“After assessing the daily data, we can deduce the decline in confidence was an example of short-lived negativity moving out of a typical news cycle. When the private company income tax news broke, there was a large spike in negativity, but this was quickly replaced as the news agenda moved on.”
From an employment sentiment perspective, for the first time since November 2021, this measurement witnessed an uptick in growth of 1.7 per cent, reflecting consumers’ long-term optimism about the UAE economy.
Return to growth
“Early indications for March show a return to growth as sentiment improves, despite concerns surrounding higher oil prices and inflation,” added Kelly.
From a GCC perspective, overall, the region rebounded well to see net consumer confidence increase 0.7 per cent in February to 58.1% from January’s 57.4%. Business confidence has rebounded strongly and is up 1.3 per cent as concerns about regional politics, global economies, and socio-political conflicts subside. Employment sentiment recorded a month-on-month increase of 2.9 per cent, continuing the positive theme.
Economically, a marginal decline of 0.5 per cent in February to 60.4 per cent was witnessed in the GCC, driven mainly by the significant increase in living costs associated with high oil prices and global supply constrictions.
“The GCC certainly appears to have snapped back from January’s declines, predominantly led by sentiment towards business and employment. It is worth noting that economic consumer confidence across most GCC countries registered positive sentiment. However, the contraction in confidence in the UAE has led to the decline,” concluded Kelly.
