UAE MasterIndex of Consumer Confidence Holds Steady

Published May 18th, 2006 - 07:29 GMT

Results of the MasterIndex of Consumer Confidence survey for the first half of 2006 reveal that consumer confidence in the United Arab Emirates (UAE) remains positive and relatively steady.

The current UAE MasterIndex score at 77.5 out of a possible score of 100 is very close to the 78.1 score received six months ago, indicating consumer sentiment is stable and optimistic. In the Middle East and Levant (MEL) the UAE ranked fourth in overall consumer confidence for the first half of 2006, down one place from six months ago.

 

In the latest survey UAE consumer sentiment on Employment increased from 69.5 in the second half of 2005 to 77.4, while positive sentiment on Quality of Life jumped from 65 to 74. However, these gains were offset by drops in sentiment on the Economy, down from 90.0 to 84.5 and Regular Income, down from 91.3 to 77.1

 

Commissioned by MasterCard International and conducted bi-annually in selected markets in South Asia, Middle East and Africa (SAMEA), the survey analyses consumers’ perceptions of economic conditions over the six months ahead. The MasterIndex has a range of 0 to 100 with 50 as the mid-point.A score above 50 indicates that consumers are optimistic about the economic climate, while a score below 50 signals that consumers are pessimistic about the economic situation.

 

The countries surveyed include Egypt, Kuwait, Lebanon, Saudi Arabia, 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 and a half years and across Asia Pacific for the last 13 years.

 

On a market basis, Kuwait (94.5 vs 90.7 six months ago) and Saudi Arabia (88.5 vs 98.5) topped the list of Middle East countries with the highest consumer confidence. These were followed by Egypt (83.0 vs 62.3 six months ago), the UAE, and Lebanon (51.3 v 59.2).India had a score of 76.4 (up marginally on 73.1 in the second half of 2005) and South Africa jumped to 91.1 from 71.2 six months ago.

 

Dr Bob Edwards, Partner and Director of Edwards Economic Research commented; “In the fifth MasterCard survey of consumer confidence in the UAE, the overall MasterIndex of Consumer Confidence was stable at 77.5 – about the same as in the previous survey and 15 points down from the first half of 2005.”

 

“In the UAE, except for a sharp upturn in the first half of 2005, the MasterIndex has had a general downward trend over the last five surveys, at a time when most broad economic indicators have been extremely positive. This trend contrasts with the general impression of the unparalleled growth and opportunity in the country.

 

“The individual components of the MasterIndex generally correlate with each other, so the perception of declining confidence is quite broadly based. Of the five components of the index, three declined between the second half of 2005 and the first half of 2006. The indicator on consumer confidence for the employment situation improved by nearly 8 points from 69.5 to 77.4.

 

“The MasterIndex of the UAE stock market seems to have captured and predicted the market's turning point with a lead time of about two quarters. Dubai-based respondents to the MasterIndex survey lost confidence in the stock market somewhere between February and August 2005 – in other words, between three and nine months before the market peaked.

 

“In the UAE, the weakest and most volatile component of the MasterIndex is consumers' perception of the quality of life. Large-scale new immigration has evidently played a major part in this phenomenon. Unprecedented competition for jobs and housing, traffic congestion, and treble-digit inflation in housing costs, are the areas of vulnerability in consumer confidence,” Dr Edwards concluded.

 

Overall confidence across the Middle East & Levant (MEL) improved in the latest survey with average confidence increasing from 78.1 six months ago to a record average high of 82.1. Since MasterIndex began in 2004 overall consumer confidence in MEL has increased steadily from the first average score of 66.1.

 

Survey results for the larger South Asia, Middle East and Africa (SAMEA) area show a similar trend of year-on-year improvement, apart from a slight dip in the second half of 2005. Overall SAMEA consumer confidence increased from 76.3 six months to a record 82.2 in this survey.

- Ends-

 

SAMEA Highlights of the 1H, 2006 MasterIndex of Consumer Confidence findings

 

·United Arab Emirates (UAE) - The current MasterIndex of 77.5 is lower than in previous periods surveyed. Even so, by definition, consumer sentiments in this market are still rather optimistic with scores well above the pessimistic barometer of between 0 to 50. Sentiment on Employment (77.4 vs 69.5 six months ago) and Quality of Life (74.0 vs 65.0) significantly improved.Sentiment on Economy (84.5 vs 90.0) and Regular Income (77.1 vs 91.3) declined.The sentiment for Stock Market (74.6 vs 74.7) remained the same.

 

Dubai

 

 

 

1 H 2006

2H 2005

Previous Index Scores

Economic variables

Optimistic

Neutral

Pessimistic

Index

Index

1H

2 H

1 H

Rated by respondents

( %ofresponse )

Score

2005

2005

2004

2004

Employment

51.5

33.5

15.0

77.4

69.5

90.5

82.3

84.3

Economy

51.8

38.8

9.5

84.5

90.0

97.9

90.7

95.6

Regular income

42.0

45.5

12.5

77.1

91.3

98.9

89.4

90.1

Stock market

42.0

43.8

14.3

74.6

74.7

88.2

84.1

79.8

Quality of life

46.3

37.5

16.3

74.0

65.0

89.1

68.3

85.6

MasterIndex

 

 

 

77.5

78.1

92.9

83.0

87.1

 

·Egypt – Consumers have become even more optimistic than they were during the last MasterIndex survey (2H 2005) in which, for the first time in the history of the MasterIndex of Consumer Confidence, they were optimistic on all five MasterIndex economic factors.Current sentiments are at a record high at 83.0 compared to 62.3 six months ago.The latest survey scores are Economy (79.3 vs 52.7), Quality of Life (86.5 vs 52.8), Employment (80.5 vs 52.7), Regular Income (89.9 vs78.7) and Stock Market (78.6 vs 65.2).

 

·Lebanon – In the previous MasterIndex of Consumer Confidence survey (2H 2005), Lebanon consumer sentiments on all five economic factors were optimistic.The latest results show that optimism has waned although sentiments overall are optimistic.The MasterIndex score is 51.3 as against 59.2 six months ago.The latest survey scores are Economy (41.2 vs 63.6), Quality of Life (46.5 vs 56.7), Employment (69.3 vs 60.2), Regular Income (58.5 vs 62.6) and Stock Market (41.3 vs 52.8).

 

·Kuwait – Kuwait is ranked first in the Middle East and Levant with a current MasterIndex score of 94.5.Kuwait results are supported by positive sentiments across all five of the MasterIndex economic factors.Consumers continue to be highly optimistic.The greatest increase was in Employment (96.5 vs 83.9 six months ago).The other scores were Quality of Life (87.7 vs 88.1), Economy (97.5 vs 93.1), Regular Income (97.7 vs 95.9) and Stock Market (93.0 vs 92.2).

 

·Saudi Arabia – The current MasterIndex of 88.5, while significantly optimistic is not as positive as the all-time high six months ago when sentiments on all five economic factors were in their high nineties.The current result shows however that consumers are still highly optimistic.The current scores are Employment (85.5 vs 99.0 six months ago), Economy (89.7 vs 99.1), Regular Income (92.8 vs 98.8), Stock Market (82.1 vs 96.7) and Quality of Life (92.3 vs 99.0).

 

·South Africa – A record high has been reached for consumer sentiment in South Africa.The current MasterIndex of 91.1 is a significant improvement on the score of 71.2 in last survey six months ago.All sentiments are higher and in some cases the leap is considerable: Employment (85.3 vs 56.8 six months ago), Economy (91.7 vs 69.1), (98.0 vs 91.4), Stock Market (90.9 vs 70.9) and Quality of Life (89.8 vs 67.6).

 

·India - India’s current MasterIndex of 76.4 is the strongest on record and significantly higher than the historical average of 66.7.The results are supported by record high Stock Market sentiment (89.5 vs 79.5 six months ago) and good results in Economy (75.0 vs 67), Employment (61.3 vs 64.2), Regular Income (78.9 vs 79.1) and Quality of Life (77.4 vs 74.9).

 

SAMEA

 

 

 

1 H 2006

2H 2005

Previous Index Scores

Economic variables

Optimistic

Neutral

Pessimistic

Index

Index

1H

2 H

1 H

Rated by respondents

( %ofresponse )

Score

2005

2005

2004

2004

Employment

45.9

41.6

12.5

78.6

70.7

73.5

63.2

57.1

Economy

51.4

37.8

10.8

82.6

76.7

79.3

69.6

64.0

Regular income

48.0

44.7

7.3

86.8

85.6

86.7

80.2

78.5

Stock market

46.3

43.1

10.6

81.4

75.9

79.0

73.3

65.9

Quality of life

48.4

40.8

10.8

81.8

72.4

76.9

62.9

63.7

MasterIndex

 

 

 

82.2

76.3

79.1

69.8

65.8

 

Notes to media

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 MasterIndex™ of Consumer Confidence survey are available. Please contact Vicki Morley, +9714 332 3308 Email:[email protected]

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 since 2004.A similar MasterIndex survey has been conducted in the Asia Pacific region for the last 13 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.To view the full set of results please go to www.mastercard-masterindex.com.

 

MasterIndex information relates to consumer perceptions on 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 106 countries and in 50 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com.



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