- Unemployment rate to reduce in South Africa, Turkey, the UAE and Saudi Arabia, indicating more resilience in the Eastern Europe, Middle East and Africa (EEMEA) region for jobseekers
- Housing-related spend in most EEMEA markets remained at the same levels in 2022 as compared to 2019
- The report revealed that businesses with an omnichannel presence are likelier to withstand shocks by meeting the customer where they want to shop
Beirut,Lebanon; 28 December 2022: The Mastercard Economics Institute released their annual forecast for the coming year which shows how a new multi-speed global economy will impact growth and consumer spending behavior. A multi-speed global economy means some markets will feel the impact of inflation and rising interest rates more keenly.
‘Economic Outlook 2023’ draws on a multitude of public and proprietary data sets, as well as models that are intended to estimate economic activity across the Eastern Europe, Middle East and Africa (EEMEA) region.
The report explores four themes that will continue to shape the global economic environment — high interest rates and housing, trading down and shopping, prices and preferences, and shocks and omnichannel.
Key findings:
- After years of a housing boom, higher interest rates are expected to squeeze cost of living budgets, shifting the way consumers spend broadly. In major developed countries, we expect housing-related spending as a share of goods to fall an estimated 4.5%[1] over the course of 2023, below pre-pandemic levels.
- In South Africa, housing related share of spend decreased by 1 percentage point in 2022 versus 2019.
- In the UAE and Saudi Arabia (KSA), housing-related spend remained at the same levels (5.90% for UAE and 10.9% for KSA) in 2022 as compared to 2019.
- Broad spending should remain resilient in the face of inflation, with consumers choosing wallet-friendly brands and chasing the best value. Globally, grocery shoppers made31% more trips to the store this year compared to 2019 – partially to reduce food waste – while their average spend per visit is roughly 9% lower[2].
- As of September 2022, consumers in the UAE increased their grocery shopping trips by 28% compared to September 2019 but spent 21.4% less per visit.
- Restaurant spending frequency in the UAE was nearly 30% higher in September 2022 than in September 2019, while the average ticket size was nearly 20% lower as even higher income consumers rein in excess
- As food and energy costs eat up a greater share of the consumer budget, lower-income households will feel an especially strong pinch. From 2019 to 2022, we saw discretionary spending[3] by high income households grow nearly twice as fast as lower-income households. However, much of this gap will diminish with the normalization in inflation. The Economics Institute expect inflationary pressure to ease next year, with the average inflation rate of developed economies falling from 7.1% YOY in Q4 2022 to 3.1% YOY in Q4 2023.[4]
- Many markets in the Middle East and Africa show a larger gap between the affluent and non-affluent households in 2019 vs 2022 discretionary spending – Morocco (71%), Madagascar (70%), Jordan (60%), Senegal (55%), Kenya (39%) and Zambia (34%).
- In Qatar, however, the trend is different. From 2019 to 2022, discretionary spending for affluent cardholders grew 104.9% while discretionary spending for non-affluent cardholders grew 103.9% a difference of 1 percentage point.
- Businesses with an omnichannel presence are likelier to withstand shocks by meeting the customer where they want to shop. Our analysis suggests that having a multichannel presence provided 6-percentage point lift in retail sector sales through 2022[5]. Small and large restaurants were saved from losing an additional 31% of sales during the height of lockdowns with their omnichannel presence.[6] Similarly, small omnichannel clothing stores outperformed online-only and brick-and-mortar-only firms, growing 10% and 26% faster, respectively.[7]
You can view the full Shifting Wallets: New consumer spending habits report here. Other reports from the Mastercard Economics Institute can be found here.
© 2022 Mastercard International Incorporated. All rights reserved.
Disclaimer
This Mastercard Economics Institute presentation (This “Presentation”) and content or portions thereof may not be accessed, downloaded, copied, modified, distributed, used or published in any form or media, except as authorized by Mastercard. This presentation and content are intended solely as a research tool for informational purposes and not as investment advice or recommendations for any particular action or investment and should not be relied upon, in whole or in part, as the basis for decision-making or investment purposes. This presentation and content are not guaranteed as to accuracy and are provided on an “as is” basis to authorized users, who review and use this information at their own risk. This presentation and content, including estimated economic forecasts, simulations or scenarios from the Mastercard Economics Institute, do not in any way reflect expectations for (or actual) Mastercard operational or financial performance. The Mastercard Economics Institute uses a multitude of data sets (public and proprietary) as well as models that are intended to estimate economic activity.
About Mastercard Economics Institute
Founded in 2020, the Mastercard Economics Institute draws on unique, high-frequency and actionable economic measurement to give leaders in business and government the insights needed to make thoughtful decisions with better outcomes.
About Mastercard (NYSE:MA)
Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.
[1] Mastercard Economics Institute estimates. Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal US dollars unadjusted for FX) and national accounts data from various national statistics agencies.
[2] Across a 15-country sample, based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022.
[3] Discretionary spending, as defined by the Mastercard Economics Institute, includes categories of consumption where consumers typically shop for non-essential goods and services. For example, it includes spending at apparel, jewelry, interior furnishings, events, and electronics stores. Non-discretionary spending includes essential categories of consumption such as food and fuel.
[4] Mastercard Economics Institute estimates of average global inflation.
[5] Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022. Classification of SMB vs. large-sized firms based on a classification model proprietary to the Mastercard Economics Institute.
[6] Across a 12-country sample, based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022, using a fixed panel of active merchants to reduce bias in measurement.
[7] Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022. Classification of SMB vs. large-sized firms based on a classification model proprietary to the Mastercard Economics Institute.