UAE consumer spending jumped 19% in 2022 as economy continued to expand

Consumer spending in the UAE increased by 19 per cent annually in 2022 as the Arab world’s second-largest economy continued to expand due to government initiatives, higher oil prices and a rebound in the tourism and property sectors. Retail spending grew by 13 per cent during the 12-month period while non-retail spending — government services, airline tickets, petrol and gas stations and education — rose 29 per cent, Majid Al Futtaim , the Middle East's largest mall operator, said in its State of the UAE Retail Economy report on Friday. Growth was registered across all sectors of the retail economy and the drivers included Expo 2020 Dubai, which delivered a boost in the first quarter, the report said. “But absolute consumer spending peaked in the fourth quarter [making up 29 per cent of all retail economy spending for the year], with notable contributions from the influx of tourists, strengthened by the Fifa World Cup in neighbouring Qatar.” Shopping events such as Dubai Summer Surprises, as well as the extended two-and-a-half-day weekend introduced at the start of 2022, also helped to boost spending, the report said. The data comes at a time when the economy continues to rebound from the coronavirus-induced economic slowdown. The UAE economy is estimated to have grown by 7.6 per cent last year, the highest in 11 years, after expanding by 3.9 per cent in 2021, according to the UAE Central Bank . UAE government revenue rose by about 7 per cent to Dh143.1 billion ($39 billion) in the fourth quarter of 2022, the Ministry of Finance said on Thursday. International visitors to the UAE more than doubled to 14 million in 2022, boosting retail spending. The property sector also had a record year, with sales at a 12-year high in terms of volume and value. Transactions increased 60 per cent, compared with 2021, while sales values were up 76 per cent to Dh265 billion in 2022. Spending on leisure and entertainment, fashion, hypermarkets and supermarkets, and general retail grew 29 per cent, 25 per cent, 11 per cent and 9 per cent, respectively, last year, the data from the report shows. E-commerce sales also more than doubled to $6 billion in 2022, from $2.6 billion in 2019, amid higher online shopping. “The final quarter of 2022 saw people becoming more cautious with their spend, opting for discounts and deals for essential items, and cutting back on non-essentials such as electronics,” the report said. Average spending per transaction in hypermarkets and supermarkets was down 3 per cent during the year. However, overall spending in the segment was up 11 per cent annually, it said. Consumer optimism remained high despite inflation, according to the report. “Although inflation contributed to higher spending because of higher prices for products such as petrol [up 38 per cent in the year], consumer confidence remained robust all year, thanks to the UAE’s relatively low inflation rates compared with other countries, and concerns around inflation declining as we head into 2023,” the report said. In Majid Al Futtaim’s Happiness Lab survey, about 90 per cent of respondents viewed the UAE’s current economic situation positively. “The strength is likely to continue in 2023 with consumer optimism about the UAE economy increasing, concerns about inflation receding and actual inflation also expected to fall,” the report said. “Job growth is strong in multiple areas, with the pace of job creation at its fastest level in six years, notably in digital and AI [artificial intelligence], as well as in tourism. The rising number of people moving to Dubai will also boost consumer spending.” The extended weekend also boosted spending, with weekend retail sales increasing by 11.3 per cent in 2022, compared with the previous year. This translated to additional spending of about Dh5.5 billion, according to Majid Al Futtaim Point of Sales data.

UAE consumer spending jumped 19% in 2022 as economy continued to expand

Retail spending grew by 13 per cent while non-retail spending was up 29 per cent, Majid Al Futtaim says