The current UAE MasterIndex score of 78.1, out of a possible score of 100, is down on the 92.9 and 83.0 scores received six months and a year ago respectively, but remains fairly positive by regional and Asia Pacific standards. In the Middle East and North Africa region the UAE ranked third in overall consumer confidence for the second half of 2005 and its score would have ranked it fourth out of the 13 countries in the last Asia-Pacific MasterIndex survey.
United Arab Emirates consumer sentiments on Regular Income (91.3) and the Economy (90.0) continue to be very optimistic, while those on Stock Market (74.7), Employment (69.5) and Quality of Life (65.0), though weaker than previous surveys, remain positive.
Commissioned by MasterCard International and conducted bi-annually in February and August in selected markets in the South Asia, Middle East and Africa (SAMEA) region, the survey analyses consumers' perceptions of economic conditions over the next six months. The countries surveyed include Egypt, Kuwait, Lebanon, Saudi Arabia, United Arab Emirates (UAE), South Africa and India. The scores are based on respondents' answers to questions relating to five variables: Employment, Economy, Regular Income, Stock Market and Quality of Life. Bi-annual Master Index surveys have been held across SAMEA for the past two years and across Asia Pacific for the last 12 years.
Senior Economist and Middle East Analyst at the UK-based Economist Intelligence Unit, David Butter said "For the second half of 2005 the scores for the UAE are lower than those for the first half of the year, appearing to indicate a drop in consumer confidence. However, the fall in the overall index is not so extreme year-on-year, and there seems to be a pattern of the quality of life scores being markedly lower for surveys taken at the height of summer, when living conditions in the Gulf are at their most uncomfortable,
"The most likely explanation for this erosion in confidence about personal status is the rise in inflation. This is only partially reflected in the official figures, which put inflation for the UAE as a whole at 5% for 2004. These figures do not take into account the central importance of accommodation costs for the majority of the UAE's working population. In many instances rents and service charges have gone up by more than 25 percent over the past 18 months, although some relief has been provided by the government's decision to award 25% increases in salaries for nationals and 15% raises for expatriates," David Butter added.
"The rising cost of living is a factor in the growth prospects of Dubai's knowledge economy. Those who might like to use Dubai as a base for advanced professional services are now concerned at the rising cost base. These concerns may start to ease over the next two-to-three years as a slew of new accommodation comes onto the market for rent or long-term leasehold.
"Dubai's leading developers are predicting that rents could even start to fall from 2007 onwards. However, consumer confidence could be affected if the adjustment in real estate prices proves to be extreme," David Butter concluded.
The MasterIndex of Consumer Confidence survey showed consumer sentiments in the Middle East and North Africa Region remained fairly optimistic (78.1) as a whole, supported by a fairly optimistic outlook on the Economy (80.3), Stock Market (75.7), Quality of Life (72.5), Employment (75.2) and rather optimistic expectations of Regular Income (86.6).
On a market basis, Saudi Arabia (98.5) and Kuwait (90.7) continue to top the list of countries with the highest consumer sentiments. They are followed by the United Arab Emirates (78.1), India (73.1), South Africa (71.2), Egypt (62.3) and Lebanon (up slightly to 59.2).
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Consumer confidence slips in UAE, but remains positive according to the MasterIndex™ of Consumer Confidence
- United Arab Emirates: Thursday, December 08 - 2005 at 14:50
- PRESS RELEASE
Results of the MasterIndex of Consumer Confidence survey for the second half of 2005 commissioned by MasterCard International have revealed that consumer confidence in the United Arab Emirates (UAE) has slipped, but remains optimistic.
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SAMEA Highlights of the H2, 2005 MasterIndex of Consumer Confidence findings• United Arab Emirates (UAE) - The current MasterIndex of (78.1) shows up as the UAE's weakest performance in the last two years of surveys. Even so, by definition, consumer sentiments in this market are still rather optimistic. Sentiments on Regular Income (91.3) and the Economy (90.0) continue to be very optimistic. Those on Stock Market (74.7), Employment (69.5) and Quality of Life (65.0), though significantly weaker than all previous surveys, remain fairly positive.
• Egypt - For the first time in the history of the MasterIndex of Consumer Confidence, Egyptians are optimistic on all five MasterIndex economic factors, albeit that their outlook on the Economy (52.7) and Quality of Life (52.8) is only mildly optimistic and the market's MasterIndex, which currently stands at (62.3), is slightly optimistic and marginally stronger than its period ago MasterIndex of 60.7.
• Lebanon - For the first time since the start of the MasterIndex of Consumer Confidence in Lebanon in February 2004, consumer sentiments on all five economic factors have become optimistic. Although a MasterIndex of (59.2) does not signify high optimism, it nevertheless reflects consumer optimism. Its improvement over period ago (44.0) and year ago (32.5) as well as the period that preceded this (32.3) is significant.
• Kuwait - In comparison with the preceding period, slightly weaker consumer sentiments are evident especially in consumer outlook on Employment (83.9 vs 92.5 period ago) and on Quality of Life (88.1 vs 93.1 period ago). However, the current MasterIndex of (90.7), supported by very strong sentiments (with index scores in the eighties and nineties) on all five economic factors, is very highly respectable
• Saudi Arabia - The current MasterIndex of (98.5) stands at the market's all-time high record with that of year ago (98.4). Consumer sentiments on all five economic factors are in their high nineties: Employment (99.0), Economy (99.1), Regular Income (98.8), Stock Market (96.7) and Quality of Life (99.0). Saudis extreme confidence may be caused by the raft of economic, health and educational measures just proclaimed by the new king, which are to take effect in October.
• South Africa - Despite the steady improvement in consumer confidence since the first MasterIndex of February 2004, consumers' sentiments, though still optimistic, are seen to decline significantly. The current MasterIndex (71.2) is much below period ago (83.5) and year ago (79.6) but it remains more positive than 1H 2004 (64.4). Weaker sentiments are evident on all five economic factors with Stock Market, Economy and Employment taking the hardest hit.
• India - India's current MasterIndex of (73.1) is just marginally higher or about the same as period ago (72.0) but it is significantly higher than both year ago (58.0) and the period before that (63.5). It is noteworthy that the current India MasterIndex incorporates Bangalore (90.0) which on account of being a booming global IT hub, shows up very much more optimistic than either Mumbai (61.4) or Delhi (66.4). Consequently, its inclusion tends to inflate the current India MasterIndex.\
This news release contains specific UAE relevant figures. Results of the MasterIndex of Consumer Confidence across the entire SAMEA Region are available at www.mastercard-masterindex.com. Graphs and illustrations for the UAE results of the MasterIndex™ of Consumer Confidence survey are available. Please contact Vicki Morley, 9714 391 4201
About MasterIndex
The MasterIndex survey of consumer confidence is the only one of its kind in the SAMEA region and has been conducted on a bi-annual basis for the past two years. A similar MasterIndex survey has been conducted in the Asia Pacific region for the last 12 years and has proved to be an important barometer of consumer sentiment. The MasterIndex is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. The MasterIndex of Consumer Confidence is the Mean Score of the Five Relative Indices. The Relative Indices measure the relative optimism of the respondents in Employment, Economy, Regular Income, Stock Market and Quality of Life. The Relative Indices are computed using the percent of optimistic replies divided by the percent of optimistic and pessimistic replies multiplied by 100. Using this method of computation, the Relative Indices will always be 50 if there are as many optimistic replies as pessimistic replies. The possible score ranges from 0 (most pessimistic) to 100 (most optimistic) with 50 denoting a situation of neutrality or implies no significant change is anticipated in consumer confidence over the next six months.
MasterIndex information relates to travel and consumer economic trends only and does not constitute a projection of the business or financial performance of MasterCard Incorporated or its affiliates.
MasterIndex - respondent base
The survey was designed to gauge the perceptions of people who have the experience and means of engaging in a wide spectrum of activities which dictate the performance of the national economy. Thus respondents were amongst the 'banked' population (i.e., to have at least a savings account, or a home/auto loan, a plastic payment or ATM card) and were between the ages of 18-64. Data collection was conducted via personal and telephone interviews with the questionnaire translated to the local language wherever appropriate and necessary. The survey has a margin of sampling error of plus or minus four percentage points at the 90% confidence level.
About MasterCard International
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members' credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard manages a family of well-known, widely accepted payment card brands including MasterCard®, Maestro® and Cirrus® and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless® advertising campaign is now seen in 105 countries and in 48 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com.
Posted by Anne-Birte Stensgaard, Senior News EditorThursday, December 08 - 2005 at 14:50 UAE local time (GMT+4)
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