Plea for population figures from the people who count



Population figures for the UAE, and especially those for Dubai, have been a tough nut for analysts to crack these past few years. Since the Government conducted a census in 2005 that revealed a population of 4.1 million little has been released publicly about fluctuations in the country's largely expatriate population. Figures and forecasts have trickled out here and there, including an estimate of 1.4 million people in Dubai in 2006, but definitive, regularly updated numbers have yet to emerge.

"As far as I know, since the 2005 census there have not been any real updates," says Nabil Ahmed, the director of research at Deutsche Bank in Dubai. Lately, though, the question of how the population has changed has become an important one for economists and analysts who are charting the country's fate through the financial downturn. Economists have seen the rounds of lay-offs that have rippled through the country as an indication that the population, especially in Dubai where the downturn has been keenly felt, may be headed for a decline.

The UAE's labour laws, after all, do not allow unemployed people to stick around and find employment elsewhere. Population numbers figure prominently in many economic forecasts, including those for economic growth, which in the Gulf is tied both to the price of oil and to the size of the expatriate workforce that is responsible for a large part of the region's non-oil production. In the absence of regularly updated government figures, analysts have taken the task of forecasting population growth into their own hands.

Mr Ahmed, for example, is forecasting an 11 per cent decline for the expatriate population in Dubai - expatriates made up 79.9 per cent of the UAE's population in the 2005 census - and a 2 per cent rise in the population of nationals. That amounts to an overall decline in Dubai's population this year of almost 10 per cent. Saud Masud, an analyst at UBS in Dubai, is projecting a population decline of 8 per cent this year. Monica Malik, an economist at Standard Chartered in Dubai, in March predicted a 17 per cent fall in Dubai's population this year.

The basic method for many analysts appears to be this: start with the 2005 or 2006 figures, project forward to last year assuming a steady growth rate, and then take into account the flagging economy to make projections for this year. But using these figures involves two areas of uncertainty: first, it is unclear what the rate of population growth was between 2005 and last year. The population could easily have been growing much faster than economists think, a possibility they freely admit. Second, the estimates of declines this year are largely notebook computations.

To estimate population declines, for example, Mr Masud assumed a 20 per cent reduction in the construction and property sector's expatriate workforce, which accounts for roughly half of all employees in Dubai. He assumed the other half of the economy would continue to grow and based his projection on the results of that. The conclusion: an 8 per cent decline this year, followed by a further 2 per cent decline next year. This, Mr Masud says, is his "base case".

"I'm doing very simple maths," he says. "This is more of a base case scenario. The story is that you're exposed to a cyclical market and you don't have enough net new opportunities to keep bringing people in." It is difficult to blame analysts for making projections such as these, even if they are based on scant data. Given the uncertainties inherent in them, it might make sense for analysts to always qualify their numbers with disclaimers, making sure to point out that these forecasts are less fact-based than, say, population forecasts for Europe or the US, where real data is much more abundant.

Analysts could also forecast ranges, rather than precise numbers. Still, the lack of regularly updated numbers from the Government is an invitation for analysts and economists to make estimates such as these. Mr Masud and Mr Ahmed have made repeated attempts to obtain updated numbers from the Dubai authorities, so far to no avail. The Government last month issued projections for this year that forecast growth of 6.3 per cent for the UAE's population, but that number appeared not to take into account the effect of the downturn on the expatriate labour force. Equally perplexing for analysts, Dubai's population was seen as growing by an even larger 7.9 per cent, from 1.596 million to 1.722 million.

It is difficult to know which projection is closest to right. The Government certainly has better access to real data on visas issued and birth and death rates, and the wide range of predictions among analysts and economists opens up some space for doubt. Analysts, meanwhile, appear to be making an honest stab at doing their jobs with the limited resources they have. So how do we reconcile these differences? That remains an open question.

More frequent reporting from the Government would certainly be a welcome development, at least for those who are in the business of evaluating the prospects for the UAE economy. There have been signs recently that increased transparency is on the way, including the introduction of monthly reporting on inflation in the UAE this April. If population statistics take the same route, analysts could soon find themselves better equipped to make their forecasts.

For now, though, most say they feel constrained by a lack of firm numbers on what has become a key economic indicator in the slowdown. "All I need to know is on a monthly basis how many visas were issued, how many were cancelled, how many people actually showed up in Dubai and how many people left without cancellation," says Mr Masud. "If we could just get a feel for what the actual expat growth has been for the first half of 2009, we can start extrapolating where this could go."

afitch@thenational.ae

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The biog

Hometown: Birchgrove, Sydney Australia
Age: 59
Favourite TV series: Outlander Netflix series
Favourite place in the UAE: Sheikh Zayed Grand Mosque / desert / Louvre Abu Dhabi
Favourite book: Father of our Nation: Collected Quotes of Sheikh Zayed bin Sultan Al Nahyan
Thing you will miss most about the UAE: My friends and family, Formula 1, having Friday's off, desert adventures, and Arabic culture and people
 

UPI facts

More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
Stamp duty timeline

December 2014: Former UK finance minister George Osbourne reforms stamp duty, replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:
Up to £125,000 - 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; Over £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak decides the fate of SDLT holiday at his March 3 budget, with expectations he will extend the perk unti June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

Moral education needed in a 'rapidly changing world'

Moral education lessons for young people is needed in a rapidly changing world, the head of the programme said.

Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.

"Moral education touches on every aspect and subject that children engage in.

"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.

"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

WHAT IS A BLACK HOLE?

1. Black holes are objects whose gravity is so strong not even light can escape their pull

2. They can be created when massive stars collapse under their own weight

3. Large black holes can also be formed when smaller ones collide and merge

4. The biggest black holes lurk at the centre of many galaxies, including our own

5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed

The Sand Castle

Director: Matty Brown

Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea

Rating: 2.5/5

How to apply for a drone permit
  • Individuals must register on UAE Drone app or website using their UAE Pass
  • Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
  • Upload the training certificate from a centre accredited by the GCAA
  • Submit their request
What are the regulations?
  • Fly it within visual line of sight
  • Never over populated areas
  • Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
  • Users must avoid flying over restricted areas listed on the UAE Drone app
  • Only fly the drone during the day, and never at night
  • Should have a live feed of the drone flight
  • Drones must weigh 5 kg or less
UAE currency: the story behind the money in your pockets