Consumers in the UAE are saving more and spending less in 2021 as they look to create a financial safety net to protect themselves following the economic uncertainty caused by the Covid-19 pandemic, according to a new survey by online financial aggregator Policybazaar.ae.
About 41 per cent of UAE residents said that accumulation of wealth would save their children or dependents from unprecedented financial disruption, according to the survey, which polled 3,000 people.
Twenty-nine per cent of those surveyed said they had started paying more attention to reducing discretionary spending and creating an emergency fund owing to a fear of deteriorating health or existing medical conditions, the research found.
“Customers are becoming more mindful of how they should spend their money and adopt new habits to save and invest for [the] future,” Neeraj Gupta, chief executive of Policybazaar.ae, said on Monday.
The Covid-19 pandemic last year tipped the world economy into its worst recession since the Great Depression, forcing countries into lockdowns that led to higher unemployment and reduced salaries, according to the International Monetary Fund.
Although governments around the world are easing restrictions and reopening their economies, the pandemic has highlighted the importance of saving and having an emergency fund for short-term liquidity needs.
The pandemic forced 28 per cent of UAE residents to prioritise their needs over wants, while 31 per cent shopped only when there were offers and discounts available, the Policybazaar.ae survey found.
Consumers spent only on essential products such as groceries, rent, utilities, transportation, healthcare and wellness products because the pandemic was a wake-up call for them to save and invest money for contingencies, the survey said.
About 67 per cent of those surveyed said they preferred to use contactless modes of payment, such as credit or debit cards, to buy essential products. Only 17 per cent preferred to shop with cash.
UAE residents are increasingly looking for ways to save money, the survey found, with nearly 62 per cent of respondents considering buying individual health insurance with critical illness riders, while 12 per cent are investing in stocks, fixed deposits and other saving schemes or cryptocurrency, according to the survey findings.
Although 16 per cent of those polled said they are still paying off debts, a majority expressed optimism about a quick economic recovery in the UAE, Policybazaaar.ae said.