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."