MANAMA, 2 December 2007 — Growing costs of living and inflation impacted consumer confidence which plunged to a record low in recent months due to widening gap in income and spending, latest survey showed.

Consumer confidence in the Middle East has taken a blow, the recent poll conducted by Bayt.com and YouGovSiraj revealed, showing a significant dip in the propensity to spend.

The third Bayt.com Consumer Confidence survey, conducted in conjunction with market research leader YouGovSiraj, revealed an increasing reluctance to spend. Consumers are increasingly unsure about their expenditure in the face of rising living costs and a slowdown in some of the regional economies.

Optimism remains however among consumers who believe the situation will improve in the next few months.

The Bayt.com Consumer Confidence Index is a quarterly survey of consumer attitudes. It measures views on the current and future state of regional economies, personal finance, saving, decisions to make investments and the employment market.

The survey polled more than 14,000 adult respondents across the GCC, Levant and North Africa over a three-month period. The figures have been compared with the results set in the April survey.

Questions explored respondents’ attitudes toward their financial and job situations, their likelihood to purchase and invest, and the region’s employment market. The survey reveals a broad range of attitudes according to country of residence, nationality, type of organization and income bracket.

This time, the index showed some startling trends with Saudi Arabia, Qatar and UAE are showing greater decline in consumer confidence with the figures standing at 88.9, 91.6 and 93.4 points respectively, declining from the benchmark 100 points. This indicates an 11.1-point decline in Saudi Arabia, 8.4 in Qatar and 6.6 in the UAE, compared to April 2007.

Consumers in Saudi Arabia (85), Kuwait (88.8) and Qatar (88.8) showed a more pessimistic attitude toward spending. This is a significant decline from July 2007 — an 18.8-point decline in Saudi Arabia and a 12.4 and 11.7-point decline in Kuwait and Qatar respectively. There was also a corresponding 9-point decline in the UAE compared to July.

Qatar, Saudi and UAE residents also showed a great decline in their optimism about their financial future and career growth. The percentage of respondents who felt their financial position will be better after a year’s time was reduced by 13 percent in Saudi Arabia followed by 8 percent in the UAE and 7 percent in Qatar from the July scores. On the career growth front, the proportion of highly satisfied respondents shrunk by 8 percent in Qatar and 4 percent each in Saudi Arabia and UAE.

Impact of inflation on business has increased with more people consequently pessimistic about growth of business. In comparison to April, 8 percent respondents in the UAE were optimistic about positive change in business conditions while 4 percent more respondents admitted to the negative impact of inflation on their businesses.

Overall rising concern about salaries not being able to match the growing inflation as compared to the April benchmark, an additional 4 percent of respondents in the UAE agreed that their salaries had not kept pace with living costs.

Moreover the survey results show a significant increase in the number of people who felt that their salaries had not kept pace with their cost of living, with the UAE respondents being the largest group at 66 percent.

Rabea Ataya, CEO of Bayt.com, said the results of the survey would serve as an invaluable resource to business leaders, economists and the general public.

He added: “While consumer confidence is resilient overall, consumers are wary about the rising costs of living and are exploring ways to rein in their expenditure. With end-of-year appraisals, salary revisions, as well as continued discussion about currency pegging in the region, the end of year is generally an uncertain time for professionals. We look forward to seeing how matters develop in the coming year and see no fundamental reasons for sustained or prolonged pessimism.”

Nassim Ghrayeb, chief executive officer, YouGovSiraj, said: “There is no question that this has been a tumultuous year. A number of factors have put pressure on the regional consumer, continued inflation and the continually declining dollar. People have not been doing badly but at the year-end, there is a sense of pessimism toward finances. Without a significant economic shift, we may even see a drop in spending next year.”