A new report suggests that consumer spending in the United Arab Emirates (UAE) climbed by significant margins in 2015. Abdulrahman Al Ansari analyses the findings.
Domestic consumer spending Regional news portal Arabian Business reports that payment solutions provider Network International has released its latest report on Emirati consumer spending. The study, which was based on UAE credit and debit card transactions, found that domestic consumer spending increased by 13% in 2015. Overall UAE card spending rose by 9% when compared with 2014, despite the devaluation of the Russian rouble cutting Russian card spending in the Emirates by almost half.
Commenting on these figures, Network International Chief Commercial Officer David Mountain said: “The UAE economy, driven by diversification into non-oil revenues, has borne resilience to current market dynamics, as indicated by our analysis of card-spending data over the past year. Our analysis indicates some strong trends that can be leveraged by retailers and merchants in the UAE to bolster marketing strategies.”
Network International further found that domestic spenders were the highest spenders in the Middle Eastern Country during 2015. Other countries that made the top spending list included the US and Gulf Co-Operation Council (GCC) nations such as Saudi Arabia, Qatar and Kuwait. In terms of top tourist spenders in the UAE, GCC spending increased by 15% and North American spending rose by 12% last year. This was partially because of the recent appreciation of the US dollar.
Since the UAE’s currency (the dirham) is pegged to the US dollar, the latter currency’s appreciation negatively affected tourist spending which involved non-pegged currencies. For instance, Chinese card spend declined by 13% from 2014 to 2015 and Russian spending declined by almost half. Due to independence from exchange rates, US spending grew. But with the exception of travel and duty free, the average purchase of US cardholders dipped across all Emirati sectors in 2015.
Emirati hotels saw spending grow by 4% in 2015. Network International added that UAE residents illustrated the highest spend rises in both the Emirati Food & Beverage and Hotel industries, spending an extra 23% in the country’s restaurants last year. Residents of other GCC nations also contributed significantly to this sector in 2015, with Qatar (+50%) and Saudi Arabia (+48%) leading the way.
Network International’s data suggests that domestic spending is allowing the UAE’s economy to resist the impact of falling global oil prices. A survey from GulfTalent, a regional recruitment specialist, of six GCC countries suggests that average UAE salaries will increase by 5.3% in 2016, slightly higher than the overall GCC average of 5.2%. In other words, evidence suggests that domestic spending will allow the UAE to maintain steady retail sector growth this year.
Furthermore despite declining Russian spend, tourism revenue continued to flow into the UAE’s economy in 2015. In a recent interview, UAE Minister of Economy Sultan Bin Saeed Al Mansouri said: “Practically tourism sector is already well-established aspect of the national economy, with plans to further develop and enhance its role in the coming period.” Over the coming year, it is clear that the
UAE will implement policies to ensure that it can utilise both domestic and tourism spend to lift its retail sector, ensuring its economy reaches new heights in 2016 and beyond.
Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.