Real household spending in UAE to rise by 4.2% in 2022

This comes as vaccine rollout drive more economic activity.

Real household spending in the United Arab Emirates is expected to grow by 4.2% in 2022 as the vaccine rollout in the country drive more economic activity, Fitch Solutions reported. 

Fitch noted that whilst the 4.2% projection is slower than the 7% estimated growth seen in 2021, the results are no longer affected by the low-base effect stemming from the pandemic-related economic crisis. 

In this light, total household spending is expected to reach US$146.3b in 2022, up from US$137b in 2021. But this will still be lower than its pre-pandemic levels of US$149.1B in 2019. 

Fitch added that the total household spending in UAE will likely surpass its pre-pandemic level in 2023, during which it is forecasted to reach US$154.6b.

In a previous report, Fitch had also projected that consumer spending will decelerate as it normalises in 2022. 

This also comes as the Central Bank of the UAE reported that household credit sentiment index improved to 29.6 in the first quarter of the year, well above the 22.1 average. 

“We believe that the resilience of consumer sentiment in the UAE is supported by a perceived return to normality in the light of an improving labour market (underpinned by elevated oil prices) and the recent lifting of long-standing restrictions,” Fitch noted. 

“Over the coming months this will encourage more people to engage in out of home activities with limited risk due to Covid-19, thereby boosting household spending.”