Consumer spending growth in UAE to ‘normalise’ to 3.6% in 2022

This is slower than the 7.5% estimated growth in 2021.

Consumer spending growth in the United Arab Emirates is expected to normalise as it decelerates to 3.6% in 2022 from around 7.5% in 2021.

Fitch Solutions noted the slowdown is because the favourable base effect has started to wear off.

In this light, total household spending will likely reach AED463.3b in real terms in 2022 from AED447.3b in 2021.

“The value of real household spending in 2022, however, will remain 2.2% below pre-pandemic (2019) levels, indicating that the recovery of the UAE's consumer and retail sector will be protracted,” the report read.

“Indeed, we only forecast real household spending to reach pre-pandemic levels in 2023. We note that real consumer spending contracted by 12.2% in 2020, caused by Covid-related lockdowns, social distancing measures and a drop in oil prices.”

Moreover, Fitch sees consumer sentiment improving, driven by the Dubai Expo as well as expectations that COVID-19 spread will gradually dissipate.

Related: Consumers in UAE remain optimistic despite Omicron variant

“We believe that the resilience of consumer sentiment in the UAE is supported by Dubai Expo, increasing economic activity and an improving labour market, underpinned by elevated oil prices and the roll-out of booster shots,” Fitch added.

“As the threat from Covid-19 starts to dissipate over the coming months, we expect sentiment to remain upbeat in the UAE, boding well for household spending.”

AED1 = USD0.27