All consumer indicators point at a return to spending in the United Arab Emirates (UAE).
Non-oil sector recovery is taking place despite continued job losses, and salary cuts mostly by the private sector.
In August, the IHS Markit said that its Dubai Purchasing Managers’ Index rose to 51.7 in July (up from 50 in June). Dubai’s non-oil economic sectors rose in July for the first time in five months.
While there are signs of recovery in hospitality, and the food and beverage (F&B) sectors, it’s really digital spending boosting those numbers.
August consumer spending up
The latest data from the Federal Competitiveness and Statistics Authority (FCSA) has shown a 63% increase in consumer spending across the UAE for the third consecutive month in August compared to March, signaling market recovery.
FCSA said that hoteliers (numbering 1100+) were among the top beneficiaries, recording a 29% increase in spending in August compared to March.
Similarly, spending on restaurants increased by 75% in August, while the apparel sector recorded a 78% rise in expenditure.
Digitization and recovery
Shahebaz Khan, general manager – UAE, Visa, noted that digitization and the economic recovery of the UAE go “hand in hand.”
“Small and medium businesses (SMEs) have been some of the worst-hit during this pandemic,” he said. “We saw that 80% of SMEs in the UAE have had their revenues negatively impacted. Our Visa Impact Tracker also showed that most consumers have reduced their spending, and this has led to an 86% fall in consumer shopping frequency.”
Khan said consumer behavior changed when shoppers took to online sites that promise contactless payments and deliveries.
“Buying online has significantly increased, as have contactless payments,” he said.
He said 92% of merchants in the UAE still have concerns about shifting their businesses online, compared to over 40% yet, 50%of cash-only merchants have been impacted due to COVID-19 lockdowns.
Visa has published its global ‘Back to Business Study’ which showed that 9 out of 10 consumers in the UAE (90%) have changed how they pay for purchases due to COVID-19, including shopping online when possible (59%), using contactless payments (52%) and not using cash as much (40%).
Nearly all (90%, compared to 63% globally) UAE consumers would switch to buying from a store that installed contactless payment systems.
In fact, almost 3 in 4 (72%, compared to 48% globally) UAE consumers wouldn’t shop at a store that requires contact with a cashier or other shared devices.
Over two in five (44%, compared to 20% globally) SMBs have allowed contactless payments for the first time since the start of COVID-19 and nearly three in five (59%, compared to 33% of global SMBs) have accepted less or stopped accepting cash during the pandemic.