Consumers in the UAE are saving more in 2021 as they look to create a financial safety net to protect themselves during the Covid-19 pandemic, new data from the UAE Central Bank shows.
Savings in accounts held in the country's lenders swelled by a total of Dh9.77 billion ($2.66bn) in the four months to April, state news agency Wam reported on Wednesday.
The new liquidity boosted the funds held in savings accounts in the UAE to a total of Dh199bn in April, from Dh189.22bn in December, data from the Central Bank of the UAE's Banking and Monetary Statistics – April 2021 report showed.
The Covid-19 pandemic tipped the world economy last year 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.
While 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, financial experts said.
“People are definitely more financially conscious and facing up to issues they have ignored for many years,” said Carol Glynn, founder of Dubai-based Conscious Finance Coaching.
“They are more worried than ever about job security and are looking to their savings to build a safety net.
"I think Covid-19 for some has also allowed time to finally look at their financial situation and invest the hours to budget, forecast and plan."
In August last year, a study conducted by YouGov on behalf of consultancy Kearney Middle East found that four out of 10 UAE residents increased their personal savings when movement restrictions were in place as they cut back spending on big-ticket items and reduced the amount of money remitted back home.
Another survey by Bayt.com and market research company YouGov in November last year found that about 68 per cent of people in the UAE considered saving money as a top priority in 2021.
“More and more customers have realised their savings potential during this period of heightened awareness. That said, as the economy opens up, we are also seeing an increase in consumption. If there's one thing the global pandemic has taught everyone, it is the importance of financial preparedness,” Suvo Sarkar, senior executive vice president and head of retail banking and wealth management at Emirates NBD, said.
“We have seen an overall increase in savings across all customer profiles, with a higher percentage of incomes being saved.”
Last year, the UAE Central Bank introduced the Targeted Economic Support Scheme – a Dh50bn, zero-cost liquidity programme for lenders in the country.
The regulator extended parts of the programme to the end of June next year to help soften the economic blow of the pandemic.
Overall, the UAE has unveiled economic support packages worth Dh388bn since the onset of the pandemic.