The world economy has been rocked by crisis and scandal for 5 years. What started as a problem in the US real estate market quickly spread and we now find ourselves several years down the line with a crisis of historic proportions in the Eurozone, questionable growth in China, and uncertainty where it all began – in the US economy. And with a 24 news cycle covering every company going into administration, jobs being off-shored to the Far East and every round of redundancies, it’s little wonder that there is so much fear, uncertainty and doubt among the public at large.
However, some would argue that the hardship this economic crisis proffers has actually taught society a lesson. First, a society cannot survive on a binge of debt. Second, that individuals need to save for their future.
In the USA
If you’d been a US citizen earlier this year, the chances are you’d have been spending more than you were earning. In fact, the personal saving rate plummeted to 3.7%, the lowest rate since the recession started, which officially did so in December 2007 according to the National Bureau of Economic Research.
But now US citizens are saving again, despite low interest rates low and the housing market and the stock exchange recovering. Charred by the recession, Americans are replenishing their savings, having fallen back on them or even taken on more debt to get by during the tough economic times.
As for ‘He who dares wins’, Americans seem perfectly happy to settle for second place or even just to finish.
So how are others managing their personal finances while the economy keeps falling down but getting up again?
Well, according to a report, Australian consumers are saving more, despite three interest rate cuts since May. The largest increase in savings ratios has been in households where fears of job loss have increased. However, the same report indicates that they’re spending more in certain areas, with borrowing to buy a home increasing and spending on cars too. Although consumer spending rose by 3.9% in September and then fell by 1.2% in October, it’s still up by 6.2% compared to a year ago.
Even in the Middle East
Consumers in Dubai, in the UAE, are also saving more. According to the Consumer Confidence Index (CCI), conducted every quarter by the Department of Economic Development, 4% more consumers placed money into savings in the third quarter of 2012 than in the second one. They’re also being more prudent, spending less on holidays, outdoor entertainment, technology, home improvements and on paying off debts, including credit cards and loans.
Not only this, the report has also found that consumer confidence has grown in the economy. 84% of the people who took part in the survey for the index believe Dubai’s economy is growing to improve, and two thirds of consumers rated job prospects as very good during the third quarter.
So it might be a good time to save if you’re in the Middle East and are thinking of opening a savings account. One good country to do so in is Qatar. In its 2012–2013 Annual Report for Global Competitiveness, the World Economic Forum named Qatar as the Middle East’s most competitive economy.
Is Saving the New Spending?
Whether you’re in Australia, the UAE or the US, saving seems to be the order of the day. If you’re in Australia you might feel tempted to splash out a bit more on a house or a car, whereas if you’re in Dubai you’ll be doing so with renewed confidence in the economy. Meanwhile, if you’re in the US, you may opt for safety all around on investment and saving and given the economic times, who can blame you?
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