JEDDAH — Saudi financial stability and saving potential will significantly increase, National Bonds Corporation's annual Savings Index for the GCC report revealed Wednesday, also noting an improvement in sentiment towards saving over 2013, when Saudi respondents expressed the most negative sentiment among the GCC (registering an index score of -5.45). In 2014, interestingly, Saudi Arabia registered the most positive shift for the GCC region, with an index score of +7.12, the report added. The results that covered the three main factors for saving - financial stability, potential for saving, and the savings environment – indicate a 6 percent increase in the proportion of savings in Saudi Arabia, with 20 percent of the respondents claiming they are saving a little more in comparison to the same period last year, while 28 percent of claim they are saving about the same as last year -showing no change over the same period in 2013. Twenty three percent of savers in Saudi Arabia claim to be saving significantly less compared to the same period last year, showing a 4 percent improvement over last year's results. In contrast, 3 percent admit to saving significantly more, reflecting no change in perception compared to 2013. Additionally, 55 percent of savers claim their savings are not at all adequate for the future, showing a 5 percent improvement over 2013's findings, while 8 percent claim their savings are adequate for the future, showing a 2 percent improvement over 2013. Eighty six percent of respondents in Saudi Arabia anticipate their financial status will stay the same or remain stable in the next six months showing a 3 percent increase compared to 2013. On the other hand, 14 percent of respondents expect their financial status to remain unstable in the next six months compared to 17 percent last year. The study also indicates that the top three factors encouraging savers to save more regularly in Saudi Arabia include: uncertain employment future, children's education expense requirements and easy access to funds, in that order. Furthermore, 64 percent of respondents in Saudi Arabia agree that the high cost of living will most likely impact their savings plan for the current year as will unexpected expenses at 51 percent. The study additionally indicates that 23 percent of Saudi respondents currently save less than 10 percent of their annual household income, while 14 percent claim to save 30 percent of their annual household income. Commenting on the results of the GCC Savings Index, Mohammed Qasim Al-Ali, CEO of National Bonds, said: "The economy of Saudi Arabia is among the best performing G-20 economies, according to the IMF. Backed by this positive sentiment, Saudi nationals and expatriates demonstrate a high level of awareness on the importance of saving. The National Bonds Savings Index clearly indicates their keenness to increase savings in the immediate future. However, recent concerns such as the high cost of living and unexpected expenses continue to impact their regular savings habits.” Al-Ali added: “We are proud to conduct such an interesting survey across the GCC as it helps us develop our strategy to support savers in holding on to their budgeting and financial plans while inspiring non-savers to adopt a healthy saving habit for a better future.” National Bonds Corporation launched the National Bonds Savings Index initiative in 2011 with the aim of providing a comprehensive study on the popular instruments used in saving, the barriers towards saving regularly and people's spending habits in the GCC countries. Key findings Index for GCC region: Time to save: The overall sentiment of Saudi Arabia towards saving has improved - from 5 percent of the respondents in 2013 to 27 percent of the respondents currently claiming this is a good time to save. Meanwhile 31 percent remain neutral and 42 percent admit that 2014 is not a good time to save. In other GCC countries, 26 percent of respondents surveyed say that this is a good time to save reflecting a 2 percent improvement from 2013. Meanwhile, 42 percent remain neutral and another 32 percent believe it is not a good time to save given the prevailing economic situation. Perception of financial status: Eighty six percent of respondents in Saudi Arabia and 88 percent of respondents from other GCC countries anticipate their financial status will stay the same or remain stable in the next six months showing a 3 percent increase for Saudi Arabia over last year and 1 percent drop for the other GCC countries compared to 2013. On the other hand, 14 percent of respondents polled in Saudi Arabia and 13 percent in the other GCC countries expect their financial status to remain unstable over the next six months. Income stability: Fifty eight percent of respondents in Saudi Arabia anticipate an increase in their income in the next six to 12 months showing an 8 percent surge in positive sentiment over 2013, while 33 percent forecast no change and a further 9 percent of respondents predict a decrease in their incomes over the same period. For respondents of other GCC countries, 41 percent expect no change and only 6 percent predict a decrease in their incomes over the next six to 12 months. 53 percent of GCC respondents claim their income will increase in the next six to 12 months. Factors likely to affect savings plans in current year: Across the board, high cost of living and unexpected expenses are considered the most likely factors to affect savings plans in the current year. Increased rental costs are also a key concern for ‘savers' in Kuwait, Qatar and the UAE. Saving instruments
* Savings accounts with banks have emerged as the most popular savings option in the UAE, Bahrain, Kuwait, Oman and Qatar, while 43 percent of all respondents in Saudi Arabia use current bank accounts for saving. * Bahrain, Oman and the UAE have registered the highest use of savings schemes linked to prize draws among the GCC countries, with 27 percent of Bahrain's respondents, 24 percent of Omani respondents and 15 percent of those in the UAE saving with prize draw schemes.
* Thirty percent of residents in Qatar, 24 percent in Oman, 22 percent in Kuwait and 20 percent in the UAE are more likely to use property as a savings instrument. — SG
