Half of UAE residents expect living standards to improve in next six months

Half of survey respondents experienced declines in their savings, while only 18 per cent saw their cash positions improve.

Half of the UAE’s residents expect their living standards to improve over the next six months despite a slew of negative economic projections.

A Bayt and YouGov survey found that 51 per cent of respondents expect improvements to their personal fin­ances within the next six months.

But in the meantime, residents are drawing down on their savings, the survey found. Half of respondents experienced declines in their savings, while only 18 per cent saw their cash positions improve.

With the low oil price causing slower growth across the region, the UAE’s economy is still forecast to grow this year – albeit at its slowest pace since the country emerged from the depths of the 2009 global financial crisis housing bubble.

Oxford Economics expects the country’s economy to grow at 2.7 per cent this year, driven by continued investment in infrastructure ahead of the Expo 2020. The IMF cut its forecast from 3 per cent to about 2.5 per cent in January.

One contrary economic signal came from a monthly Purchasing Managers’ Index for February. The survey reported that Dubai’s economy may have shrunk last month for the first time since 2010.

The data suggest that Dubai, whose economy is more sensitive to changes in trade volumes and the US dollar, has been hit worse than the rest of the country. Overall economic activity in the country increased last month, but at a diminished pace, according to the PMI data.

Informal economic indicators like the PMI index are the best current indicators of the state of the economy, because official economic data usually lags developments by several quarters.

The need to piece together imperfect statistical information on the country’s economic situation makes it hard to get an overall picture of changes to living standards in the UAE.

The UAE’s economy is likely to slow further, analysts agree, as sizeable public spending cuts are felt. The government cut spending by 21 per cent year-on-year in the third quarter of 2015, the most recent period for which data are available. These cuts were focused on capital spending and infrastructure, which analysts say are the means by which the UAE will reduce its dependence on oil.

The ratings agency Moody’s placed the UAE, Abu Dhabi and Dubai on negative credit outlook last week, saying that lower-than-expected oil prices would worsen the fiscal positions of the federal and emirate-level governments.

Follow The National's Business section on Twitter