First with Financial Comment from Arabia

Dubai official statistics clearly in need of revision

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It was hard not to miss this headline today in Gulf News: ‘Dubai’s GDP rises 0.3% in first quarter despite the global downturn’ according to figures released by the Dubai Statistics Centre.

Lest we forget the comparative period is Q1 2008 when the Dubai economy was overheating with a massive real estate and construction boom and traffic gridlocked at rush hour.

Counter-cyclical or counter-reality?

Are we really to believe that GDP improved after the real estate crash that crunched house prices in half and left dozens of construction sites abandoned, including the second and third palm islands and the City of Arabia along with much of the Dubailand theme park?

Dubai was a very much quieter city in the first quarter of 2009. Traffic flowed with ease and the construction trucks that once backed up along the Emirates Road were gone. Most local business struggled and downsized operations.

Still we are asked to believe that GDP was actually up in Q1 this year compared with a year ago. So where did this supposed growth come from?

Apparently the ‘five most predominant sectors which have shown resilience to the economic downturn’ are ‘wholesale retail trade, manufacturing, restaurants and hotels, government services and the banking sector’.

Many hotels were half empty in Q1 in my humble recollection and restaurants even emptier. Banks have been tightening up on credit, or so the central bank says, and making provisions for non-performing loans; their business was down.

Real estate crash

Government services presumably contracted along with the rest of the economy as people left due to the collapse of the real estate boom, and surely the same applied to local manufacturing. Wholesale retail, perhaps grew with the opening of huge new shopping malls that needed stocking up, and the chamber cites four per cent growth here.

Official statistics are supposed to be useful guides to local and global business about the state of the economy but these figures seem very out-of-line with experience down-on-the-ground, and urgently in need of revision.

For GDP figures do need to accord somewhat closer to reality in order to be held up as credible. Otherwise the $18.6 billion quarterly GDP total is also going to be called into question.


Written by Peter Cooper

October 28, 2009 at 11:09 am

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