Omar Al-Ubaydli is a Bahraini economist and a columnist for The National
March 13, 2024
In Muslim countries, Ramadan ushers in changes to the daily work schedule. Economists studying their effects have found an interesting contrast. While there is a negative impact on economic growth, happiness levels tend to increase. Which is to say, the same Muslims who are producing less also report higher levels of subjective happiness. These dynamics should serve to remind Muslims about the true goals of Ramadan.
Estimating the effect of Ramadan on economic growth is not as easy as it might appear. The logical starting point would be to compare the economic growth of Muslim majority countries to those where Muslims are a small minority during the month of Ramadan.
The problem with this approach is that Muslim and non-Muslim countries differ in many ways that are unrelated to fasting. Accordingly, we cannot be sure that the observed difference in economic growth is the result of fasting; it might be any one of the other ways in which the two sets of countries differ.
A volunteer prepares an Iftar meal for at a mosque in Adliya, Bahrain. Reuters
For example, during Ramadan in 2020, oil prices fell to historic lows due to a Covid-19 induced collapse in the global demand for oil. In terms of population, Muslim countries are overrepresented among major oil producers. So, an economist comparing economic growth in Muslim countries to that in non-Muslim ones during Ramadan 2020 would erroneously conclude that fasting has a large negative impact on economic growth. This well-known difficulty in statistics is known as the “omitted variable problem” or the “confounding variable problem” that economists refer to as the “endogeneity problem”.
In a 2015 scientific paper, the solution proposed by Harvard University public policy professors Dr Filipe Campante and Dr David Yanagizawa-Drott was to exploit the variation in the hours of fasting caused by the Earth’s position in its orbit of the Sun, and by a country’s distance from the equator.
As any Muslim who has fasted for several years knows, the incongruence between lunar and solar months means that Ramadan shifts back approximately 10 days annually. In a given country, the number of hours of sunlight – and hence the number of hours Muslims are required to fast – depends on two factors: the country’s distance from the equator, and the calendar month ( which points to the Earth’s position in its orbit of the Sun).
This means longer fasting when Ramadan coincides with summer, and shorter fasting when it coincides with winter, with the difference becoming more acute the further the country is from the equator.
I visited Norway last August and, when I checked the prayer times and discovered that I had to pray maghrib at around 10pm, I wondered how on earth Muslims living there managed to fast around 15 years ago when Ramadan was in the summer.
The technique used by Dr Campante and Dr Yanagizawa-Drott is to essentially compare Muslim countries to themselves and one another, noting that the ones that are further from the equator have to fast longer hours than the ones close to the equator, and that the magnitude of the difference changes as Ramadan shifts through the solar calendar. This allowed them to effectively isolate the impact of fasting, filtering out the noise coming from other economic growth-related variables that might change at the same time.
The study finds clear evidence of a negative impact of fasting on economic growth in Muslim countries. This is entirely expected, since the month sees a shortening of the working day in Muslim countries. Moreover, Muslims spend a smaller proportion of their time on activities that increase GDP, such as shopping and going to the movie theatre, and a greater proportion on activities that do not increase GDP, such as praying and reading the Quran. This change in behaviour is precisely what Islam prescribes, as Muslims are instructed to be more pious during the holy month.
The technique that Dr Campante and Dr Yanagizawa-Drott use to estimate the effect of Ramadan on economic growth can also be used to estimate the effect of Ramadan on many other variables. They use the World Values Survey – one of the most important periodic surveys of people’s socio-demographic characteristics and views across the globe – to determine how fasting impacts people’s subjective well-being, that is, their self-reported level of happiness.
The authors find that Muslims are significantly happier during Ramadan. Again, this is entirely expected since – despite the physical hardship associated with fasting – it is something that Muslims willingly do out of a sense of devotion. Moreover, beyond the benefits, Muslims also spend more time with loved ones, taking a break from hectic, work-centric lifestyles. In other words, the decrease in economic growth is entirely worth it – whatever Muslims lose in terms of consumption of goods and services is more than offset by their higher levels of life satisfaction during Ramadan.
The human brain is miraculous, but it has many flaws, and one of them is that it can be difficult to break a bad habit, such as forgetting to visit loved ones or eating an unbalanced diet. In this regard, the fasting requirements of Ramadan work as an externally enforced self-audit. It helps Muslims reassess how they allocate hours to the many demands on their time.
Naturally, this is not the only reason why fasting during the holy month is obligatory for able-bodied adult Muslims;but one of the religion’s virtues is that it always surprises us with how the benefits of adhering to its edicts only become clear to Muslims living in a certain era. For example, many secular, scientific studies conducted in the 21st century have found that fasting can help decrease the incidence of Type 2 diabetes.
Muslims reciting the Quran during the seventh century would not have been aware of this benefit beyond the tacit implication that fasting is good for you, embodied in the Quranic instruction to fast. Today, Muslims are fortunate to have a better understanding of the advantages that fasting confers upon them, which can help them summon the requisite motivation.
Yet, arguably, the most important reason why Muslims should fast appears in the Quran’s first reference to the act: “O believers! Fasting is prescribed for you – as it was for those before you – so perhaps you will become mindful of Allah.” (2:183).
Accordingly, Muslims should not worry about the adverse effect of Ramadan on GDP growth – they should embrace it.
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
UAE currency: the story behind the money in your pockets
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Indoor cricket in a nutshell
Indoor Cricket World Cup – Sep 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), EsekaiaDranibota (Harlequins), Matt Mills (Exiles), JaenBotes (Exiles), KristianStinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), EmosiVacanau (Harlequins), NikoVolavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), ThinusSteyn (Exiles)
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
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.”
The UAE squad for the Asian Indoor and Martial Arts Games
The jiu-jitsu men’s team: Faisal Al Ketbi, Zayed Al Kaabi, Yahia Al Hammadi, Taleb Al Kirbi, Obaid Al Nuaimi, Omar Al Fadhli, Zayed Al Mansoori, Saeed Al Mazroui, Ibrahim Al Hosani, Mohammed Al Qubaisi, Salem Al Suwaidi, Khalfan Belhol, Saood Al Hammadi.
Women’s team: Mouza Al Shamsi, Wadeema Al Yafei, Reem Al Hashmi, Mahra Al Hanaei, Bashayer Al Matrooshi, Hessa Thani, Salwa Al Ali.