More spending, healthier economy?

More spending, healthier economy?

Despite the global increase in consumer spending, there will be mixed benefits in the GCC due to the region’s varied demographics.

March 2, 2010 4:13 by Aarti Nagraj

The demographics of a country also make a big difference to its spending habits, says Molina. For instance, in a country like Saudi Arabia consumer confidence was not hit hard by the crisis, due to the belief that the government would intervene. And hence, people continued spending. However, consumers in the Kingdom are by nature more conservative about their spending habits as opposed to people in the UAE, says Molina.

While a portion of UAE expatriates spends exorbitantly, a major chunk of the population, belonging to a lower income group, is not in a position to spend as much, he says.

However, after the crisis, people in the UAE have also tightened their purses. A report released by research firm Datamonitor in January claimed that more than 55 percent of the consumers in the UAE felt that they were financially worse off than they were six months ago. The study said that 70 percent of UAE consumers were taking active measures to control “discretionary expenditure,” while 40 percent say that they are making lifestyle changes to save money.

Hence, while an increase in consumer spending usually brings with it economic benefits, demographic differences and many other factors have to be taken into consideration before the extent can be measured.

Personally, if you saw signs of the economy improving, would you start spending more? Or did you never change your spending habits in the first place?

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Tags: consumer spending, Economy, Financial Crisis, impact, increase, recovery, US