Mastercard Economics Institute’s Economic Outlook for 2023: Qatar minimizes spending gap between affluent, non-affluent households

• Qatar’s consumers double discretionary spending in 2022
• Housing-related spend in most EEMEA markets remained at the same levels in 2022 as in 2019
• Businesses with an omnichannel presence are likelier to withstand shocks by meeting customers where they want to shop

Doha, Qatar; 28 December 2022: The Mastercard Economics Institute released its annual forecast for the coming year, which shows how a new multi-speed global economy will affect growth and consumer spending behavior. The report indicates that 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.

Key findings:

• As food and energy costs eat up a greater share of the consumer budget, lower-income households will feel an especially strong pinch. From 2019 to 2022, discretionary spending[1] by high-income households grew nearly twice as fast as for lower-income households. However, much of this gap will diminish with the normalization in inflation. The Mastercard Economics Institute expects inflationary pressure to ease next year, with the average inflation rate of developed economies falling from 7.1% YOY in Q4 2022 to 3.1% YOY in Q4 2023.[2]
• Many markets in the Middle East and Africa show a larger gap between affluent and non-affluent households in 2019 vs 2022 discretionary spending, e.g., Morocco with 71% and Jordan with 60%.
• Qatar, however, is bucking the trend. From 2019 to 2022, discretionary spending for affluent cardholders surged by 104.9% while discretionary spending for non-affluent cardholders increased by 103.9% – a difference of one percentage point.

• After years of a housing boom, higher interest rates are poised to squeeze cost-of living-budgets, shifting the way consumers spend broadly. In major developed countries, the outlook anticipates housing-related spending as a share of goods to fall an estimated 4.5%[3] over the course of 2023, below pre-pandemic levels.
• In most EEMEA markets, housing-related spend remained at the same levels in 2022 as in 2019.

• Broad spending should maintain resilience 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 was roughly 9% lower[4].

• Businesses with an omnichannel presence are likelier to withstand shocks by meeting customers where they want to shop. The analysis suggests that having a multichannel presence provided a six-percentage-point lift in retail sector sales through 2022[5]. Small and large restaurants were saved from losing an additional 31% of sales during the height of lockdowns with their omnichannel presence.[6] Similarly, small omnichannel clothing stores outperformed online-only and brick-and-mortar-only firms, growing 10% and 26% faster, respectively.[7]

You can view the full ‘Economic Outlook 2023’ report here. Other reports from the Mastercard Economics Institute can be found here.

[1] Discretionary spending, as defined by the Mastercard Economics Institute, refers to categories of consumption where consumers typically shop for non-essential goods and services, e.g., apparel, jewelry, interior furnishings, electronics and events. Non-discretionary spending includes essential categories of consumption, such as food and fuel.

[2] Mastercard Economics Institute estimates of average global inflation.

[3] Mastercard Economics Institute estimates. Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal US dollars unadjusted for FX) and national accounts data from various national statistics agencies.

[4] Across a 15-country sample, based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022.

[5] Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022. Classification of SMB vs. large-sized firms based on a classification model proprietary to the Mastercard Economics Institute.

[6] Across a 12-country sample, based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022 using a fixed panel of active merchants to reduce bias in measurement.

[7] Based on an analysis of aggregated & anonymized Mastercard switched volumes (nominal local currency) through September 2022. Classification of SMB vs. large-sized firms based on a classification model proprietary to the Mastercard Economics Institute.