Saudi Arabian consumers highly optimistic about future: survey

JEDDAH — Consumers in Saudi Arabia are highly optimistic about their future, according to MasterIndex of Consumer Confidence survey for the second half of 2006.

By Habib Shaikh

Published: Thu 8 Mar 2007, 8:37 AM

Last updated: Sat 4 Apr 2015, 10:47 PM

Results showed that consumers in the Kingdom are confident on all five economic factors — employment, economy, regular income, stock market and quality of life, surveyed for MasterIndex.

Commissioned by MasterCard Worldwide and conducted bi-annually in selected markets in South Asia, Middle East and Africa (SAMEA), the survey analyses consumers' perceptions of economic conditions over the six months ahead. The MasterIndex has a range of 0 to 100 with 50 as the mid-point. A score above 50 indicates that consumers are optimistic about the economic climate, while a score below 50 signals that consumers are pessimistic about the economic situation.

The most significant increase in the Saudi Arabia Index score was the increase in consumer sentiment on the stock market, which rose to 95.8 from 82.1 up 13.7 points from the last survey six months ago. Saudi Arabia saw improvements on all the factors surveyed. Perceptions on quality of life rose to 97.6 from 92.3, Regular Income rose to 96.5 from 92.8, sentiment on economy improved rising to 98.8 from 89.7 and employment rose to 97.9 from 85.5, the second highest leap overall up 12.4 points.

The current Saudi Arabia MasterIndex score of 97.3 out of a possible score of 100 is a significant improvement on the 88.5 score received six months ago but in line with the buoyant Index scores shown in previous MasterIndex surveys. Confidence appears to be restored to the market's high levels of a year ago and preceding periods.

The latest survey conducted in the second half of 2006 measures perception of consumer confidence for the 6 months ahead. In the Middle East and Levant (MEL), Saudi Arabia is ranked first in overall consumer confidence rising from second place in the last survey conducted six months ago in which Kuwait was ranked on top.

The countries surveyed are Egypt, Kuwait, Lebanon, Saudi Arabia, the UAE, South Africa and India. The scores are based on respondents' answers to questions relating to five key economic barometers: employment, economy, regular income, stock market and quality of life.

Looking at the SAMEA region as a whole Saudi Arabia (97.3 vs 88.5 six months ago) topped the list with the highest consumer confidence Index score followed by Kuwait where the result stayed the same, (94.5 vs 94.5 six months ago). These were followed by South Africa (86.5 vs 91.1 six months ago), the UAE (80.0 vs 77.5 six months ago) and Lebanon (67.6 vs 51.3 six months ago). The India score dropped from 76.4 six months ago to 65.1.

"The MasterIndex survey participants are generally optimistic about the prospects for the economy, employment, their regular income, the stock markets and the quality of life in the countries of the region. Real GDP for the region has expanded by some 6.5-7 per cent during 2006 and growth is expected at similar rates into 2007. "Consumer's perception of the economy is in most cases in line with the actual economic growth outcomes and is reflecting the 'feel good' factor for the economy, regular income and employment," commented Dr. Nasser H. Saidi, Chief Economist, Dubai International Financial Centre (DIFC) and a former Minister and Central Bank First Vice-Governor in Lebanon.

"Comparing the consumer economy confidence variable of the MasterIndex with the International Monetary Fund's (IMF) recent, current and forecasted real GDP growth rates for the economies of the region, we can see that both the consumer sentiment about the economy and the change in the forecasted growth rate tend to move together," he added.

Overall confidence across MEL improved slightly in the latest survey with average confidence increasing from 82.1 six months ago to 83.9. Since MasterIndex began in 2004 overall consumer confidence in MEL has increased steadily from the first average score of 66.1 and currently has an historical average of 75.2.

Survey results for the larger SAMEA area did show a trend of improvement until this latest survey when the result slipped from 82.2 six months ago, to 80.3. Overall SAMEA has an historical average of 74.7.