The UAE is projected to see a substantial 13 percent net increase in consumer spending intentions for 2025, marking the highest growth rate globally, according to a study released on Monday. This contrasts sharply with global spending intentions, which are anticipated to decline by a net 12 percent, as reported in the 2025 Global Consumer Outlook by AlixPartners, a global consulting firm.

The report draws on feedback from over 15,000 consumers across nine countries and indicates that while spending is expected to rise in the UAE, Saudi Arabia, and China, it will face significant restraint in the U.S. and Europe. In these regions, spending is likely to decline further from already low levels, indicating another challenging year for industries that cater to consumers.

As reported by Khaleej Times, in the UAE, the expected increase in consumer spending is consistent across all income brackets but particularly notable among high-income shoppers. Among different age groups, consumers under 45 are projected to lead this spending surge, with a remarkable 27 percent increase across various retail segments. This trend is largely attributed to higher disposable incomes and the financial demands of starting and expanding households. Conversely, shoppers aged 45-64 are more inclined to maintain their current spending habits, with 85 percent indicating no change, while 27 percent plan to significantly reduce their expenditures.

Grocery spending is expected to see the highest increase at 47 percent, driven by rising disposable incomes, price inflation, and a trend towards premium products among high-income shoppers. Clothing follows closely, with a projected 41 percent increase in spending, spurred by growing disposable incomes and an influx of premium brand offerings. Despite these increases, consumers are also focusing on savings by planning their purchases more effectively and switching to more affordable retailers, relying less on promotions than in previous years.

In non-grocery categories, consumers are adopting more strategic purchasing plans while avoiding certain categories altogether. Dining out remains a divisive topic; one-third of UAE consumers plan to increase their spending on meals, whereas globally, 34 percent intend to cut back on dining expenses, with only 19 percent planning to spend more.

Entertainment outside the home is gaining popularity, with 41 percent of UAE consumers intending to spend more in this area, followed by 33 percent in Saudi Arabia and 28 percent in China. If given additional funds in 2025, UAE consumers indicated that their top spending priorities would be travel and holidays (26 percent), followed by saving instead of spending more (20 percent), and groceries (18 percent).

Despite the overall positive growth narrative in the region, Abdul Khalek cautioned that there is a noticeable consumption bifurcation. As discount retailers gain market share, some consumers are opting for more affordable options, particularly in the grocery sector. Companies in the region face profitability challenges amid reduced investments and streamlined operations. While this has not yet impacted consumer sentiment, it is a development that may require careful monitoring as the market continues to evolve in the upcoming year.