A higher percentage of UAE consumers reported struggling to make end meets following the introduction of value added tax in the second quarter of the year compared to the first, according to a new survey.
Comparison site Yallacompare said its consumer confidence tracker survey of 1,347 UAE residents showed 13.9 per cent had issues meeting their basic needs compared to 11.9 per cent in the first three month of the year.
This compared to 52.2 per cent that said they were getting by but had to make spending cuts as a result of VAT, down from 58.3 per cent in the first quarter. While the remaining 30.9
“The additional people who reported that they are struggling to make ends meet in Q2 were made up almost entirely of those who were managing to get by, despite making spending cuts, in the first quarter of the year,” said Yallacompare chief financial officer Jonathan Rawling.
“This suggests that the increased costs of living associated with the introduction of VAT are hitting some UAE residents harder than was likely envisioned.”
Despite the higher cost of living, UAE residents were found no more likely to consider leaving the country than the previous quarter. The tracker found 22.8 per cent were more likely to leave due to rising costs in Q2 compared to 24.4 per cent in Q1 and 41.5 per cent were less likely to leave from 42.2 per cent previously.
Overall, 41.2 per cent of respondents were less confident about their financial health than this time last year, compared to 42.9 per cent who said the same in Q1. Just over 19 per cent were more confident about their financial health than 12 months ago.
In addition, 35 per cent said they had seen a salary increase over the last 12 months compared to 30 per cent during the quarter with overall job confidence up 4.4 per cent and job security 5.4 per cent.
“A raft of new stimuli from the government, announced during the quarter, has likely boosted business confidence, which may allow employers to begin matching salaries to the increased cost of living,” said Rawling.
This year, UAE government authorities have announced Dhs50bn of stimulus measures in Abu Dhabi and cuts and freeze to fees elsewhere to boost the economy.
The measures follow the introduction of a 5 per cent value added tax on January 1 that applies to most goods and services and has seen prices for many items increase. –ME website
