The National on 1th Aug , 2010 reported consumer and business confidence in the UAE to be on the rise . This is broadly and directionally consistent with similar findings released recently , such as Bayt.com/YouGovSiraj and Nielsen Global Consumer Confidence Index reports in July as well as the Mastercard consumer confidence report released last week.
This is based on a survey conducted with YouGovSiraj and you can read it here. I have put together some of the key numbers from the report in Ballpark 4 attached with this post
For sure , things have improved from those grimgrom days of late 08 – early 09 but I’d take the savory headlines with a pinch of salt yet .
Glass half-full , half the businesses surveyed (56%) expect to improve in the coming year ; but glass half empty , the other half do not. If you combine the latter with the facts of reduced cash and constricted credit, firms’ likely spending and investments in the immediate future are not so rosy as all that. Actually , digging deeper into the numbers , the glass is really about only 17% full or 3% empty ! Those being the outliers of expecting “significant” improvement and worsening respectively . My interpretation is that businesses are expecting things to be pretty much where they currently are , i.e. 73% between “improve a little” to “worsen a little” is what i’m looking at.
On the consumer / public side , for the 66% whose salary did not increase over the last 12 months , I believe the ‘real’ impact , given the drop in inflation, was not as bad as it could have been. By the same token however , you’d need to look deeper into those expecting salary increases .Now , if you assume – reasonably , I think – that those who expect a raise are expecting an improvement in the economy and – ok,less obviously - therefore , some natural inflation which that implies – say , around of 5% or roughly half the 2007-08 inflation rate – then it means that 30% of those optimists (the 18% expecting a raise of less than 5% ) expect no improvement in their ‘real’ salaries. So rather than reading a 61% expecting a salary increase , I am seeing this as 58% (18% + 40% not expecting any raise) expecting no significant ‘real’ raise in their salaries.
This is not to say that the ‘public’ think it through exactly that way of course. But the key pointer for me really are the 75% that are concerned about job security. That to me straight away is a dampener on future spending , irrespective of any positive salary-raise expectations.
In sum , I believe businesses are still very cautious and will be for some time. Consumer salaries have remained flat for nearly two years now and will probably remain that way into the immediate future. Any increases moreover will not translate into significantly higher immediate consumption owing to continuing uncertainty and job security concerns. Just my two cents – and i sure hope i am reading this wrong and erring on the side of caution !
Consumer confidence and business outlook findings are only one aspect of the picture. Must take a dekko at other , regional (especially KSA) and global indicators soon
Cheers for now 
