Sila Consumer Sentiment Index - Country Deep-dive September 2022

All major indices were up in September, showing a post-summer bump we saw last year and reflecting the global reality of the UAE’s position during a time of global uncertainty. The question remains - will sentiment dip in the future as global issues start to weigh on the highly internationalised economy? Or has Dubai, in particular, built further resilience?

United Arab Emirates Consumer Sentiment

Overall sentiment rose by the same margin it fell in August (6bps) to be at net 78%. Just off the March highs of 82% net positive. The economy metric rose from +58% net positive to 63%, an increase of 5pbs, to be around the highest level since January 2021 - the economy metric has not broken through the 64% barrier since the CSI began. Employment continues its relative rollercoaster, rising from a 14-month low in August of +65% to rise of +7bps to 72% net positivity. This appears to mirror almost specifically private business confidence and may be related to the post-summer bump in activity witnessed across the UAE, but particularly Dubai. Business rose 6bps to 81% net positivity to be just off series highs. The rise was after the same fall in August and foreshadowed an increase in overall confidence. There are no discussions about global repercussions or interest rate pressure yet in this sector, but it is one that we’ll continue to monitor. December last year saw a fundamental change in dynamics between Employment and Business. Often employment has been above business since March 2021. January 2022 saw a sharp drop in employment sentiment that hasn’t recovered, while business sentiment continues to improve. Now, employment is more intertwined with business sentiment and maybe one to watch over time.

Saudi Arabia Consumer Sentiment

As has been the trend with Saudi Arabia, there is much variation between governmental sector sentiment and private sector, which still weighs heavily on the performance of the overall metric. After briefly flirting with net positive sentiment, the overall sentiment still sits below the neutral zone and seems a way off the resistance of 51% - only achieving positive sentiment in Jun. A +3bps rise in sentiment from 45% to 48% has even seen some dips. This is driven primarily by flat Employment sentiment in Saudi Arabia, with 0% change in September resting at 65% net positive. This has been a trend in eroding sentiment across the last few months as relative stability has left the market and more global news weighs on employees' minds in the Kingdom. Net sentiment in the economy also went up from 73% net to 79%, of the series high of 93% positive sentiment in the economy. Again, global issues were at the fore, including price rises and potential contagion from other markets. The overall trend lines show that the economy and business are trending upward. Meanwhile, the employment sentiment in Saudi Arabia is declining over the long term after being quick to recover during Covid. Saudi business still struggles to see the upside of the Kingdom's improvements in economic circumstances, with a net rating of +33%, well below the positive threshold of 50%. This is mainly due to the uneven benefits of the economy and the lack of trickle-down opportunities.

Kuwait Consumer Sentiment

The Kuwait consumer sentiment index rose to 57%, off a series low of 53% in August, a rise of +4bps. This is mainly due to several positive announcements in the Kuwait political landscape that have given hope for forthcoming stability to the Gulf petrostate. Employment sentiment in Kuwait continues its downward trend from a peak fo 94% net positive (at the margin of error) in May 2021 to a series low of 57% in September. Confidence among ex-pats continues to erode sentiment. The overall index was helped by a bounce in positivity from 54% in August for business to 57% in September and a bounce in the economy from 55% to 57%. All three indexes for the second time in Kuwait converged. Mostly domestic issues affect consumer sentiment in Kuwait, with global issues having little effect on the smaller GCC state. There appears to be an acute need for a solution to the labour issues and overall business conditions.

Qatar Consumer Sentiment

The World Cup bounce has arrested a series of declines in the host State with a 6bps bounce in consumer sentiment to edge back to net positive territory for the first time since mid-2021. The employment sentiment stayed extraordinarily positive for September, settling at an unchanged 81% net positive. This is a series high continuances from August. The key issues are intertwined in Qatar - the business and economic index, with conversation driven not by the benefits of the World Cup but the perceived problems, whether real or not. This has led to some businesses not seeing an upside to the event's hosting yet. The business sentiment rose from 32% to 39% off higher energy prices but remains off the series high of 55% in March 2021. The economic sentiment continued its long-term rising trend rising from 37% net negative to 41% net negative - getting closer to positive territory.