When the George W. Bush entourage rolled into town last month and Dubai shut down in response, the first thought of ABF was to work out how much the enforced time off had cost the economy.
That turned out to be something of a pointless exercise. One of the local newspapers estimated that the Bush-based downtime cost the emirate $117.6m – calculated by dividing $42.7 bn, the GDP in 2006, by 365. Unfortunately, it was hard to be any more accurate than that.
Notwithstanding the fact that many staff at Dubai International Financial Centre believe national holidays are for wimps, and worked anyway, the figure for Dubai’s GDP in 2007 was not yet available.
Nor is there an up-to-date measure of the inflation rate in the UAE. The 2006 figure of around 10% has been criticised by Mohsin Khan, director of the International Monetary Fund’s Middle East and Central Asia department. He says it is calculated using an outdated formula that does not reflect the true extent of inflation.
Information shortages are also an issue in some other areas. The Saudi Stock Exchange produces plenty of data on trading activity, which is a vital resource – if you can read Arabic.
Many filings to the region’s other stock exchanges are also Arabic-only, which is understandable, but presents limitations when trying to attract foreign investors.
In the field of private equity, which is shaking off its reputation for being opaque and secretive in the US and Europe, it is still very difficult for investors to compare funds operated by Middle East firms, or even to find a reliable figure representing the total value of private equity transactions conducted in the region.
In some of these cases, the lack of historical data is reasonable enough – private equity barely existed in this region 10 years ago and most firms in operation today have not been through the full cycle of deployment and divestment with a fund.
Still, it is good news that the UAE is apparently establishing a central statistics unit to create a single point of reference and, hopefully, a reliable source of data. Palestine has had one since 2000 and there is no reason why states with greater resources should not be able to do the same.
Reliability of economic indicators and industry data is vital to maintaining the trust of investors, particularly those from other markets. Of course, it may take a cultural change for some businesses – or even institutions – to open up, but it has to happen eventually.
As more and more of the region’s banks adopt technology giving them an enterprise-wide view of their data, it seems strange that some economies do not yet have the same thing.
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