DUBAI, (Reuters) – Confusion over a surprise change to a key growth measure in the United Arab Emirates this week has prompted calls for improvements to economic data releases as investor interest in the booming Gulf region intensifies.
Countries in the world’s biggest oil-exporting region have been thrown into the global spotlight as their economies race ahead of the world economy due to high oil prices, giving them windfall revenues to invest in big-ticket acquisitions in the West and Asia.
But consistent economic data — including gross domestic product (GDP), inflation and money supply — has struggled to keep pace, with few countries offering timely, detailed statistics or a calendar of scheduled releases.
Heeding these calls, Gulf government bodies are attempting to reform and improve the quality and timeliness of economic indicators as they prepare for a regional monetary union.
“These economies are now becoming global economies,” said Marios Maratheftis, head of research at Standard Chartered Bank.
“In the area of statistics, the availability of data has the potential to improve substantially. The market would benefit from knowing a calendar of data announcements and regular updates on the economy.”
The UAE, the second-largest Arab economy and the world’s fifth-biggest oil exporter, revised down its 2007 real GDP growth rate estimate to 5.2 percent from an earlier 7.6 percent, according to data sent to Reuters by the ministry on Wednesday.
In an apparent contradiction later that day, the ministry issued a denial through the state news agency, WAM, that it had revised down last year’s economic growth estimates, saying it was sticking to a headline growth rate of 7.4 percent published in a ministry report in March.
Ministry officials declined to comment immediately on Thursday about the accuracy of the data, which some economists said appeared to have resulted from a complete revision of the methodology used to calculate national accounts.
“The national accounts compilation system suffers from a number of deficiencies, including lack of a comprehensive data collection program,” the International Monetary Fund (IMF) said in a report on the UAE in October.
“The statistical techniques used in compiling GDP by production and expenditure approaches are not sound,” it said.
Economists rely on regular official economic data to analyse economic trends, but there is a dearth of timely data in the region. Qatar, Bahrain, Kuwait and Oman — for instance — have yet to release constant price GDP estimates for 2007.
In another example in late June, Qatar revised up its current price GDP growth figure for 2007 to 25 percent from a 12 percent estimate released in March.
Some regional economists said they had little faith in some Gulf macro-economic data and were instead looking at micro-economic trends — such as the performance of the banking sector and debt issuances — to judge the state of the economy.
Steps, meanwhile, are being taken to improve economic data in the Gulf region as economies like the UAE become key regional commercial centres. While Gulf economies surge, inflation is also accelerating on higher real estate and food prices.
The UAE — where inflation hit an at least 20-year high of 11.1 percent last year — is the only Gulf oil producer that releases inflation data annually and even it usually emerges months after the end of the year.
The ministry is working with the IMF to revise the current index, which it has called “outdated”, and begin releasing price trends monthly beginning next year.
“Efforts to upgrade the statistical system have intensified,” the IMF said.
“The authorities underscored their determination to make major improvements in the UAE statistical systems in the next few years as highlighted in their strategic plan.”
Meanwhile, an Abu Dhabi Statistics Centre is set to open this month to compile and release more regular economic and social data on the emirate.