Purchasing power: Dubai 14th in world

DUBAI, AT 36TH IN PRICE LEVELS, A MUCH MORE EXPENSIVE CITY THAN MANAMA AT 39TH

City more expensive than Manama, which figured in top 10 of cities ranked by UBS in terms of prices, earnings

Bahrain’s capital Manama figured in the top 10 cities in the world for purchasing power, the only non-transatlantic contender in the top ten along with Hong Kong, while Dubai ranked 14th on the list, according to a UBS study.

The UBS Global Wealth Management’s Chief Investment Office published its 17th study, which was instituted in 1971 after Bretton Woods of fixed exchange broke down, of 77 cities in terms of prices and earnings, comparing prices of 128 goods and services that a family consumes and an average earnings of 15 professions, representing the average working population.

Manama came in at 8th in terms of purchasing power, while for price level the city was ranked 39th, and the city figured 35th on the list for earnings just before Dubai.

Earnings

Dubai, which ranked 36th on the list, was a much more expensive city compared to Manama. Los Angeles figured first in the list for purchasing power followed by Zurich. For earnings, Geneva was the best place followed by Zurich, and they were equally expensive.

“The purchasing power is pretty high for Manama ... It seems to have solid earnings relative to its price level. Income taxes and social security are much lower compared to many developed economies, that means net hourly wages are making big moves up in the ranking because we have very less tax or security deductions,” Daniel Kalt, chief economist and regional chief investment officer Switzerland at UBS Switzerland, told a conference call. The cities were indexed with New York, which was at 100, and the reference currency was the US dollar.

Riyadh was added to the study this year, and ranked 24th for purchasing power, and 39th for earnings and 60th on price levels.

Generally, Gulf economies have been witnessing a slowdown in growth due to lower prices of oil, from which these countries derive most of their revenues.

Global rankings

“Purchasing power matters to all of us as individuals and as investors. Whether you are planning your next vacation or trying to understand long term shifts in economic power ...,” Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, said.

According to the study’s Purchasing Power Index, residents of European and North American cities typically enjoy the best buying power overall. Global financial capitals New York and London rank 10th and 23rd respectively.

“Our purchasing power index clearly indicates that we are beginning to see stronger competition from overseas with only three European cities left in our top ten, all of which lost ground compared to the report’s 2015 edition,” Kalt said.