Consumer spending in the UAE increased by 19 per cent annually in 2022 as the Arab world’s second-largest economy continued to expand due to government initiatives, higher oil prices and a rebound in the tourism and property sectors.
Retail spending grew by 13 per cent during the 12-month period while non-retail spending — government services, airline tickets, petrol and gas stations and education — rose 29 per cent, Majid Al Futtaim, the Middle East's largest mall operator, said in its State of the UAE Retail Economy report on Friday.
Growth was registered across all sectors of the retail economy and the drivers included Expo 2020 Dubai, which delivered a boost in the first quarter, the report said.
“But absolute consumer spending peaked in the fourth quarter [making up 29 per cent of all retail economy spending for the year], with notable contributions from the influx of tourists, strengthened by the Fifa World Cup in neighbouring Qatar.”
Shopping events such as Dubai Summer Surprises, as well as the extended two-and-a-half-day weekend introduced at the start of 2022, also helped to boost spending, the report said.
The data comes at a time when the economy continues to rebound from the coronavirus-induced economic slowdown.
The UAE economy is estimated to have grown by 7.6 per cent last year, the highest in 11 years, after expanding by 3.9 per cent in 2021, according to the UAE Central Bank.
UAE government revenue rose by about 7 per cent to Dh143.1 billion ($39 billion) in the fourth quarter of 2022, the Ministry of Finance said on Thursday.
International visitors to the UAE more than doubled to 14 million in 2022, boosting retail spending.
The property sector also had a record year, with sales at a 12-year high in terms of volume and value.
Transactions increased 60 per cent, compared with 2021, while sales values were up 76 per cent to Dh265 billion in 2022.
Spending on leisure and entertainment, fashion, hypermarkets and supermarkets, and general retail grew 29 per cent, 25 per cent, 11 per cent and 9 per cent, respectively, last year, the data from the report shows.
E-commerce sales also more than doubled to $6 billion in 2022, from $2.6 billion in 2019, amid higher online shopping.
“The final quarter of 2022 saw people becoming more cautious with their spend, opting for discounts and deals for essential items, and cutting back on non-essentials such as electronics,” the report said.
Average spending per transaction in hypermarkets and supermarkets was down 3 per cent during the year.
However, overall spending in the segment was up 11 per cent annually, it said.
Consumer optimism remained high despite inflation, according to the report.
“Although inflation contributed to higher spending because of higher prices for products such as petrol [up 38 per cent in the year], consumer confidence remained robust all year, thanks to the UAE’s relatively low inflation rates compared with other countries, and concerns around inflation declining as we head into 2023,” the report said.
In Majid Al Futtaim’s Happiness Lab survey, about 90 per cent of respondents viewed the UAE’s current economic situation positively.
“The strength is likely to continue in 2023 with consumer optimism about the UAE economy increasing, concerns about inflation receding and actual inflation also expected to fall,” the report said.
“Job growth is strong in multiple areas, with the pace of job creation at its fastest level in six years, notably in digital and AI [artificial intelligence], as well as in tourism. The rising number of people moving to Dubai will also boost consumer spending.”
The extended weekend also boosted spending, with weekend retail sales increasing by 11.3 per cent in 2022, compared with the previous year.
This translated to additional spending of about Dh5.5 billion, according to Majid Al Futtaim Point of Sales data.
MANDOOB
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THREE
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The story of Edge
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, established Edge in 2019.
It brought together 25 state-owned and independent companies specialising in weapons systems, cyber protection and electronic warfare.
Edge has an annual revenue of $5 billion and employs more than 12,000 people.
Some of the companies include Nimr, a maker of armoured vehicles, Caracal, which manufactures guns and ammunitions company, Lahab
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
COMPANY%20PROFILE
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
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How will Gen Alpha invest?
Mark Chahwan, co-founder and chief executive of robo-advisory firm Sarwa, forecasts that Generation Alpha (born between 2010 and 2024) will start investing in their teenage years and therefore benefit from compound interest.
“Technology and education should be the main drivers to make this happen, whether it’s investing in a few clicks or their schools/parents stepping up their personal finance education skills,” he adds.
Mr Chahwan says younger generations have a higher capacity to take on risk, but for some their appetite can be more cautious because they are investing for the first time. “Schools still do not teach personal finance and stock market investing, so a lot of the learning journey can feel daunting and intimidating,” he says.
He advises millennials to not always start with an aggressive portfolio even if they can afford to take risks. “We always advise to work your way up to your risk capacity, that way you experience volatility and get used to it. Given the higher risk capacity for the younger generations, stocks are a favourite,” says Mr Chahwan.
Highlighting the role technology has played in encouraging millennials and Gen Z to invest, he says: “They were often excluded, but with lower account minimums ... a customer with $1,000 [Dh3,672] in their account has their money working for them just as hard as the portfolio of a high get-worth individual.”
BELGIUM%20SQUAD
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Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
Elvis
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KILLING OF QASSEM SULEIMANI
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
How to become a Boglehead
Bogleheads follow simple investing philosophies to build their wealth and live better lives. Just follow these steps.
• Spend less than you earn and save the rest. You can do this by earning more, or being frugal. Better still, do both.
• Invest early, invest often. It takes time to grow your wealth on the stock market. The sooner you begin, the better.
• Choose the right level of risk. Don't gamble by investing in get-rich-quick schemes or high-risk plays. Don't play it too safe, either, by leaving long-term savings in cash.
• Diversify. Do not keep all your eggs in one basket. Spread your money between different companies, sectors, markets and asset classes such as bonds and property.
• Keep charges low. The biggest drag on investment performance is all the charges you pay to advisers and active fund managers.
• Keep it simple. Complexity is your enemy. You can build a balanced, diversified portfolio with just a handful of ETFs.
• Forget timing the market. Nobody knows where share prices will go next, so don't try to second-guess them.
• Stick with it. Do not sell up in a market crash. Use the opportunity to invest more at the lower price.
Ad Astra
Director: James Gray
Stars: Brad Pitt, Tommy Lee Jones
Five out of five stars
