Consuming Confidence


Economic News

22 Jul 2010
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A series of surveys into consumer and business confidence in Qatar have delivered some mixed messages, suggesting a degree of unease on the part of the public over the short-term future, despite the underlying strength of the country's economy.

A recent index of consumer confidence by MasterCard Worldwide found that consumer confidence remains strong, suggesting faith in the performance of the economy for the next six months.

The survey covered five main topics: employment, economy, regular income, stock market and quality of life, with a score over 50 indicating a positive outlook. Overall, respondents indicated a high level of confidence, with the average score at 88.6 points, and the results for the employment section of the survey topping out at 98.8. Across the region, Qatar ranked second, behind Kuwait, in the consumer confidence index.

The only negative feedback came from the stock market outlook. Though the score of 63 points put the confidence rating in the Qatar bourse in the 'somewhat optimistic' category, it is somewhat at odds with the 91.4 points the economy as a whole rated.

According to Shaun K Rashid, MasterCard Worldwide's senior business leader for the Middle East and the Levant, Qatar's strong development as a market had prompted the company to include it in the survey.

However, the survey did not directly take into account inflation, which rose to 14.75% in March.

According to another study released in early June, consumer confidence in Qatar fell sharply in the first five months of 2008, declining from 88.6 points in January to 82 points in May.

Concerns over inflation and standards of living were strongly reflected in the results, with 59% of respondents saying their wages have not kept pace with rising prices. There were also worries that the employment market was getting tighter, with just 58% saying they were optimistic over the availability of new jobs, down from the 65% registered in the previous study, carried out in January 2008.

Qatar also recorded one of the biggest drops in consumer expectations and optimism across the region, with this segment of the survey showing an 11 points decline.

Just 28% of Qataris surveyed said the country's economy was better than six months ago, while 36% said the situation has worsened and 25% believe there has been no change.

This fall in confidence could have a direct impact on the economy, with consumers becoming more cautious in their spending habits. One of the possible knock-on effects of sliding consumer confidence could be pressure on premium brands, as shoppers look to reduce their spending, according to Nassim Ghrayeb, research firm YouGovSiraj's chief executive officer.

In contrast, a survey by HSBC published on June 22 showed Qatar topping the Bank's Gulf business confidence index table in terms of optimism for the immediate future, with an index rating of 109.1 points, well above the regional average of 94 points.

According to Keith Bradley, the head of commercial banking for HSBC in the Middle East, the mood of confidence and the expectations of growth among the region's small and medium-sized enterprises were significant.

"In terms of turnover, staffing levels, and growth prospects, the region's businesses are in expansion mode," he said.

Though Qatar's consumers may be worried about the economic prospects for the future, clearly their employers are not.

The economy may have expanded at its slowest rate since 2003, but it still grew by 12.5% and Qatar's economy remains one of the fastest growing in the region. While less optimistic for the short-term future, the general public's fears may be misplaced.

In any case, with such divergent results from a variety of surveys, the public can pick which set of figures it wants to believe.

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