Domestic spending continues to be backbone of UAE economy: Network International

Network International's 2016 card spends report for Q1 also finds that overall tourism spends declined by six per cent in the UAE.

Domestic card spends in the UAE have increased by 12 per cent in the first quarter of 2016 compared to the same period last year, according to a report on consumer card spends for the first quarter of 2016 by Network International, the leading payment solutions provider in the MENA region.
The report, based on credit and debit card transactions in the UAE, found that spending by UAE-issued cards continues to show the strongest growth along with the rest of the countries in the GCC whose spends have increased by  three per cent. Overall card spending in the country has increased by seven per cent, largely due to the influence of regional consumers while e-commerce card spends have grown by a staggering 27 per cent
"Domestic card spenders in the UAE continue to remain the most positive influence on the economy's growth. With increased card spending seen from the GCC countries, savvy retailers should continue to gear their marketing strategy toward regional consumers' attitudes and preferences as they emerge to be the largest target market for the country's business owners. Additionally, online spends have increased more than ever before and represent the changing shopping preferences of customers in the country. Retailers will have to adopt to these shifting patterns and expand their online offerings to take full advantage of the growth potential of e-commerce," said Bhairav Trivedi, CEO, Network International.
 
Tourism trends affect spends
Network International's 2016 card spends report for Q1 also finds that overall tourism spends declined by six per cent in the UAE. Due to a continuous appreciation in the US Dollar along with a bullish global economic outlook and a fall in the prices of crude oil, the largest declines came from China (26 per cent) and Russia (24 per cent). While overall card spending from Europe and North America has decreased by three per cent and five per cent respectively, the following countries display strong positive spending growth for the first three months of 2016: Finland (+28 per cent), United Kingdom (+15 per cent), and Ireland (+15 per cent).The most promising sector in the UAE is undoubtedly the F&B industry with increased domestic card spending of 19 per cent and overall card spends increasing by a healthy 17 per cent. Top international card spending growths came from the MEA region including Saudi Arabia (+31 per cent), Egypt (+29 per cent) and Qatar (+27 per cent). However, Americans also displayed an increased appetite with a strong 20 per cent growth while the UK had a positive 12 per cent growth in the sector.
Pressure on Luxury Retail and Hotels
The luxury retail market took the largest hit in the first three months of 2016 with a decline in card spends of 15 per cent as compared to last year resulting significantly due to the decline in Chinese (52 per cent) and Russian (42 per cent) spending in this sector. There was also a significant decline in card spends by United States (32 per cent) and Saudi Arabia (29 per cent) as well but a modest decrease in domestic card spending of five per cent softened the impact overall. Both overall and domestic card spends in the hotels industry fell slightly by three per cent in Q1 2016 (with a 10 per cent decline in average per purchase spend). Interestingly, card spending from the United Kingdom spiked upwards by 17 per cent.
Supermarket spends increase
Supermarkets card spends as expected, are dependent on domestic consumption and grew by 21per cent. Surprisingly, the largest spike in supermarket spending came from cards issued in Egypt (+70 per cent) and Saudi Arabia (+43 per cent). - business@khaleejtimes.com