BCG survey finds GCC residents the most globally optimistic

16 December 2019 Consultancy-me.com

A survey conducted by BCG has found residents of the GCC to be the most economically optimistic around the world, with more than a quarter set to up their spending in the coming year.

The first consumer sentiment survey conducted in the Gulf region by global management firm Boston Consulting Group has found local residents to hold higher levels of financial optimism that their contemporaries around the world. As a reflection of the economic optimism, 27 percent of the more than 7,000 national and expatriate survey participants were anticipating an increase in personal spending on products and services in the coming 12 months.

“GCC countries have a strong cohort of wealth, with consumer sentiment and optimism levels ranking very high by most world standards,” said BCG Middle East managing director Rami Rafih, with the firm noting that GCC countries are represented in the top quartile of average income per capita globally. Another recent BCG report also highlighted the Middle East as an outlier in terms of the stalled growth in personal wealth seen elsewhere in the world last year.  

Still, overall growth in the region according to World Bank estimates is likely to remain below 3 percent. Nevertheless, nine out ten GCC respondents reported optimism about the future, a rate well above the 55 percent response recorded in BCG’s equivalent survey in Russia and easily eclipsing the ~70 percent in Africa and Brazil. “The optimism levels in the GCC seem to be a function of the financial security that the residents of these countries feel,” state the authors.  

Economic optimism and financial security in the GCC

According to the firm, only in the UAE and Oman, which have comparatively lower levels of self-identifying financially secure residents than their GCC counterparts (at respectively 82 and 80 percent), does the optimism level dip below 90 percent. Meanwhile, the optimism in Bahrain is as high as 96 percent, with 93 percent of respondents also expressing feeling of financial security – the Kingdom ranking the highest among the GCC members in both categories.

The respondents also reported stricter savings habits (between 10 percent to 25 percent of monthly income across the GCC, with those in Qatar as much as 50 percent) than international counterparts such as those in the US (10.5%) and Japan (9%) – offering up funds set aside for an emergency, a financial cushion, and the ability to be able to take a trip or vacation as the top three reasons for savings. A good number, however, are also planning to increase spending.

Results from the survey suggest a potential boon to the food & beverage, non-luxury fashion, educational services, and out-of-home entertainment segments (a recent Strategy& report suggested that tailoring entertainment options could increase annual spending in the GCC by $3.4 billion), with these areas the most frequently cited among the 27 percent of respondents who said that they were expecting to increase their spending in the next twelve months.

Only 12 percent of those interviewed anticipated a decrease in spending (with around one half not expecting a change in their purchasing patterns), and it’s worth noting that the in-person surveys were actually conducted in January and February – at a time when Bahrain had only just experienced a consumer splurge in advance of the introduction of VAT. One explanation for the strength of the local consumer market: a young, fast-growing, and digitally savvy population.

Taken together, these factors according to BCG represent a significant opportunity for expansion-minded companies. “If ever a region had the potential to capture the attention of multinational companies,” says the firm, “this is it”. BCG also points to two other fertile conditions; exceptionally high internet penetration rates and a fledgling ecommerce culture. “Tapping into the region’s vast potential will become a priority for many e-commerce companies in the future,” concludes Rafih.