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Young and in debt
More than a quarter of Arab youths owe money, mostly in the form of credit cards and personal loans. But how did they borrow so easily?
March 7, 2010 6:40 by Aarti Nagraj
The debt results are more understandable given the high levels of spending among the Arab youth, with over half of the respondents saying that they spend money on clothing, mobile phone calls and dining out.
Only 20 percent of those surveyed said they save money. The survey found that the main concern among youths is the rising cost of living in the region; to keep up their lifestyles, many youths now have to spend more money, and in turn, take on more debt.
The ease with which the youth population seems to have got these loans is surprising, especially considering that the survey was conducted in October last year. While the lending situation has eased up a bit now, last year in places like the UAE banks imposed extremely tight restrictions on who was permitted to borrow money.
According to recent statistics, loans in the UAE grew by just 2.4 percent in 2009, compared to an annual growth rate of about 35 percent between 2005 and 2008. At the end of 2008, many banks operating in the UAE, including Lloyds TSB and HSBC, also raised minimum salary requirements for personal loans. So how is it that these young people could borrow so easily?
In places like Saudi, one can attribute the debt to the rising number of credit cards. According to the Saudi Arabian Monetary Agency (Sama), the number of cards issued in the Kingdom almost doubled from 6.4 million in 2004 to 12.6 million in 2009. The number of point of sale terminals, through which card transactions can be made, has also risen from 35,521 in 2004 to 63,870 in 2009.