MasterCard Survey Reveals Consumer Confidence Impacted By Concerns Over Employment
Inaugural MasterCard Worldwide Index of Consumer Purchasing Priorities Highlights Key Areas of Discretionary Spend in 2009
Consumer confidence in the UAE is lower for the first half of 2009, according to the latest MasterCard Worldwide Index of Consumer Confidence, with the lowest Index score for employment since 2004. While confidence is lower, overall results show that UAE consumers are still optimistic about Regular Income, the Economy and Quality of Life in the six months ahead. In line with the latest Index, MasterCard has also launched the inaugural MasterCard Worldwide Index of Consumer Purchasing Priorities.
The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities are based on consumer surveys conducted by MasterCard across seven markets in the Middle East and Africa. A total of 3,200 consumers were surveyed between 14 October and 11 November 2008. Data collection was via personal, telephone and Computer Aided Telephone interviews, with the questionnaire translated to the local language wherever appropriate and necessary. The Index and its accompanying reports do not represent MasterCard financial performance.
The long running MasterCard Worldwide Index of Consumer Confidence, now in its 5th year and released twice a year; provides information on consumer sentiment across the region. The Index is based on a survey which measures consumer confidence on prevailing expectation in the market for the next six months. It is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral.
In the UAE, the current consumer confidence score of 75.4, is a drop from a period ago [85.4] and a year ago [78.5]. It is also below the market historical average [83.5]. However, consumers remain highly optimistic especially about Regular Income [91.6], the Economy [83.2] and Quality of Life [76.7]. They are somewhat more optimistic about the Stock Market [68.3] than they were a period ago [65.2] and year ago [73.4]. Consumer outlook on Employment [57.0] though still positive has seen a significant drop, from 95.8 a period ago and 85.6 a year ago; representing the lowest index score for measurement for Employment in the UAE since the beginning of the Index in 1H 2004.
The new MasterCard Worldwide Index of Consumer Purchasing Priorities, which will be also released twice a year, provides valuable insights into consumers’ savings and expenditure behavior and their discretionary spending priorities for the six months ahead.
“In spite of the severe global credit crisis, the GCC markets are in a strong position to weather the economic storm,” said Dr. Yuwa Hedrick-Wong, economic advisor, Asia/Pacific, MasterCard Worldwide. He further observes that “in the short term, GCC governments have the financial wherewithal to provide the necessary fiscal stimulus to support continuing economic growth to mitigate the worst of the global impact; but more importantly, the investment made in recent years in infrastructure and capacity building will bear fruit in the coming years and decades. The question of whether GCC markets may suffer from a technical recession in 2009 is not the critical issue; the fact today is that their economies are grounded on a much more robust and sustainable foundation than ever before.”
Key highlights include:
MasterCard Worldwide Index of Consumer Confidence
The Index is calculated based upon percentage response figures, with zero as the most pessimistic, 100 as most optimistic and 50 as neutral. Five economic factors are measured: Employment, the Economy, Regular Income, Stock Market and Quality of Life.
Amidst the global financial and stock market turbulence of the past six months, consumer confidence in the Middle East as a whole, remains unscathed and continues to be fairly optimistic. The Index in the Middle East, which currently stands at 72.7 shows that consumers have in fact become a little more optimistic than period ago (66.4) and slightly less so with the optimism of year ago (73.6) and the Middle East historical average (76.0).
• Consumer confidence in Saudi Arabia [72.4], Qatar [76.2] remains fairly to very optimistic. However, current consumer sentiments are lower than period ago, year ago (Qatar only has one previous study). The overall decline in the Index in Qatar and Saudi Arabia is due largely to erosion of confidence in the stock market, which as it stands now, is slightly pessimistic.
• Lebanon [69.1] and Egypt [55.6] have both made a remarkable recovery from their rather pessimistic outlook from the previous Index to an optimistic position in the case of the former and a slightly optimistic one in the case of the latter, which was actually boosted by the surge of consumer confidence in Alexandria [72.8]. While consumer sentiments in Cairo [47.3] have improved significantly, consumers still remain cautiously pessimistic.
• Kuwait [96.6] hits a new high surpassing all previous records. In fact, the current Index of 96.6 surpasses all others, be it a period ago 89.4, a year ago 93.3 or the market’s historical average of 92.1.
MasterCard Worldwide Index of Consumer Purchasing Priorities
• Currently a majority of consumers in the Middle East are spending between 41 – 60% of their total annual household income on household expenses. This is less so for consumers in the UAE (21-30%).
• A majority of consumers in the Middle East do not believe their expectations on the increase in inflation will affect their spending. UAE consumers however expect to cut back on their spending.
• Across the Middle East, a majority of consumers are expecting to spend on their children’s education and dining & entertainment in the next 12 months ahead. In the UAE however consumers saw Property & Renovations, Fashion & Accessories and Dining & Entertainment as main areas they would spend on.
• More than half of the respondents in the Middle East believe that saving is very important, with a majority of consumers planning to save between 11-20% of their total income in the next 12 months. In the UAE, saving is also a top priority with a majority of the consumers planning to save between 11 – 40% of their income in the coming 12 months.
• Over the 12 months ahead, both males and females across the Middle East equally expect to save between 11 – 20 % of their total income.
More information on the Index can be found at the website www.masterintelligence.com
MasterCard and its Suite of Research Properties
The MasterCard Worldwide Index of Consumer Confidence and MasterCard Worldwide Index of Consumer Purchasing Priorities comprise part of the MasterCard Worldwide Index suite of research products in the Middle East and Africa. The other key MasterCard Worldwide Index research products include the MasterCard Worldwide Centers of Commerce and the MasterCard Worldwide Emerging Markets Index.
About MasterCard Worldwide
MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 18 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to http://www.mastercard.com.
