The UAE economy has remarkably remained strong during the last few years. However this all-time strength has been tainted by a couple of downsides, notably high inflation rate and high consumer spending, according to the weekly report released by Department of Planning and Economy (DPE) in Abu Dhabi.
It added that the latter accounts for almost half of the UAE’s Gross Domestic Product (GDP), rising by 122% during the last five years from AED144 billion in 2002 to AED320 billion in 2007.
"This means consumer spending has been on the rise at the average annual rate of 18 per cent, a rate that is twice as high compared to the overall economic growth rate of the country during the same period", the report said.
It indicated that as consumer spending is one of the main indices of economy, natural and balanced increase in this index impacts positively on production and the overall economic performance, whereas excessive rise would have a negative impact. For instance, a considerable chunk of liquidity would be drained at the expense of production and investment. Indeed, some of the woes that have beset the UAE’s economy have to do with the pervasive culture of consumer spending.
The report added that semi-official statistics indicate that per capita consumption in the UAE is seven-fold higher compared to the average spending in the rest of Arab countries.
