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DOHA: Consumer spending is tipped to soar to almost three-fourths of a billion riyals during Ramadan this year, thanks to a mix of factors, including the huge salary rise for Qatari public servants and defence personnel announced late last year, and galloping food prices.
And as it is customary for Qatari families to throw banquets for relatives and friends during the holy month with many of them resorting to bank loans to meet additional expenses, worried community elders are busy waging campaigns in their own ways against extravagance and reliance on loans.
Consumer spending during last Ramadan was close to QR500m (QR495.5m) and the figure, according to market experts, is expected to climb to a staggering QR700m during the fasting month this year. “The general feeling in the Qatari community is one of well-being. People’s purchasing power is rising, and then there was this salary rise for public and defence employees last year, so all these factors would definitely lead to increased consumer spending during Ramadan,” said financial analyst and investment expert, Abdullah Al Khater. He told The Peninsula yesterday that during Ramadan people host relatives and friends for lavish dinners, the spending in the community goes up.
Many families resort to bank loans with some people topping up their existing loans to meet Ramadan expenses. “However, the bank loans taken in Ramadan do not put much financial strain on families,” said Al Khater.
According to him, bank loans that Qatari families take to travel overseas for vacationing, especially during the summer months, are quite huge and burdensome.
“Such loans actually frustrate household budgets and particularly strain the financially hard-pressed limited-income families,” he added.
The problem with fellow citizens is that they know to write bank cheques but do not know how to manage their finances, said Al Khater.
This apart, a number of charitable societies hold mass Iftar parties for the poor.
The Iftar meals are mostly supplied by catering companies or hotels and restaurants, taking the demand for foodstuff to record highs during the holy month. Year-on-year inflation figures for food items released by the Qatar Statistics Authority (QSA) last May show that food became 3.7 percent costlier as compared to the same month of 2011.
However, soaring demand for foodstuff during the fasting month due to the above factors coupled with inflation and rising purchasing power of citizens is to largely blame for the expected 40 percent increase in consumer spending this Ramadan.
The high consumer spending that is expected during the holy month is despite the fact that the Ministry of Business and Trade has put a maximum limit to retail prices for at least 275 food and non-food items that are in high demand during Ramadan.
As for the GCC region as a whole, total consumer spending during Ramadan is likely to soar to an astronomical QR28bn, which is more than half the consumer spending (QR43bn) during the remaining 11 months of the year, Al Sharq said.
“People in the GCC countries heavily rely on personal bank loans to meet their uncontrollable expenditures during Ramadan. About three-fourths of the citizens of these countries are indebted due to personal loans. This practice has to be curbed. People should be made aware about how to be economical and productive,” said a businessman, Dr Sami Al Nusairi.
The volume of personal loans in the GCC countries disbursed particularly during Ramadan has been growing and has multiplied almost five times (470 percent) over the past decade, the daily said.
Dr Noora Al Maadadi, a Qatari businesswoman lamented at the near-absence of a savings culture in Qatar (and, arguably, in the rest of the region).
“People go for shopping during Ramadan and buy food and non-food items without thinking or planning. At the end of the month, they find that many of the items are in surplus and were not needed at all,” said Maadadi
Citing studies, she suggested that consumer spending in Qatar during this Ramadan was expected to soar to a whopping $700m as against nearly $500m spent last Ramadan.