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.
- 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% 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 made 31% 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.
- 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