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double post

fayz wrote:I’ll be honest I just skimmed the last little bit and and have no experience in the fields of macro economics or marketing but okay let’s say that the prices of homes don’t get included in GDP all the companies supporting that industry do?

I.e. 1 have one friend who owns a pool installation company and another whose main business is importing outdoor furniture, both of these guys companies sales would be factored in with the GDP? Is that correct? If so I’d venture that if you look at the amount of people that work in the housing after sales supports/marketing both of homes, vacations retreats and the ‘dream of dubai’ make up a big chunk of the workforce and cash influx into Dubai. I know you both but doesn’t this in itself prove Ian’s point?

I also remember reading in a government published report that Oil is not the main source of income but rather tourism is.

Anyway I’ll have to get motivated and read this thread in detail, seems pretty interesting.

Bit lost here Fayzy

I will try to summerise it how i saw it. Ian posted this earlier

:

So to summerize these figures, Dubai contributes a total 47.8% to the UAE's GDP, with only 5.1% of this being oil relatated exports.


Ahhh... yeah, and where do you think the 'other' comes from? Tourism and Property. Or as I questioned earlier... is there some other mystery source of money?

Which is my point entirely... the current growth is being fuelled by these two sectors, and the current influx for these sectors is heavily biased towards Euro currencies... hence any revaluation will have an adverse effect.

As it happens he was totally incorrect. Oil accounts for a mere 5.1% of the GDP and property sales dont count at all. He still seems to be at a loss of what other income is generated in terms of imports into the Dubai /UAE. I have posted an example within this thread re China. If i were to hazzard a guess i would imagine that Dubai Port Authority and Etistobalot and the tourist industry are well into the top ten of contributors to Dubai's GDP.

However we all agree that the income generated and the product lifestyle of those inhabitants in those new properties do count towards the GDP. However given the small population of those expats and UAE nationals(about 650.000) they really dont make much of a dent in the overall grand scheme of things re GDP

Likewise your friends in running their business do make a contribution to the UAE GDP, in fact those in business in effect make a double contribution, both in the exection of their business and again in spending the profit of their business.

hmm it may be me that is lost, I need to re read.

arniegang wrote:
As it happens he was totally incorrect. Oil accounts for a mere 5.1% of the GDP and property sales dont count at all. He still seems to be at a loss of what other income is generated in terms of imports into the Dubai /UAE. I have posted an example within this thread re China. If i were to hazzard a guess i would imagine that Dubai Port Authority and Etistobalot and the tourist industry are well into the top ten of contributors to Dubai's GDP.

I'm not sure you're reading what I am actually writing.

Where did I state property sales contribute 'directly' to GDP? Hint: AFNW!

What is an indisputable fact is that Euro money is coming into this country, via property and tourism, and going into the bank account of the Ruling power.

As has been correctly stated, this is NOT GDP. However, it INFLUENCES GDP. Cerebus Paribus... is an economics terms that relates to 'all other influences being equal' the problem is not all other influences ARE equal, which is why in C.P., GDP is not affected by housing sales, but sans parity it is.

I am not going to get into a debate on the value of GDP or using it as a sole indicator (it is a flawed measure used in isolation), more to the point I want to get back to discussing the peg and the effect a revaluation of the dirham would have.

It can undoubtly be said, if the value of the dirham is increased, in raw economics term this will weaken the buying power of any non US currency, and hence affect the influx of funds.

This is high school economics... I'm a bit confuddled in why we even need to attempt to dispute this argument so I will paraphrase it in a very lay term:

"If the value of the dirham is increased, property and tourism here will become more expensive to a non US currency, and hence will make it less attractive. This being the case, the ruling class will make less money, and this is something they don't want. Hence, they are hesitant to revalue the dirham."

Especially of course since the price of oil has gone up to a new high again, and everything else we can assume is heavily dependent on Euros, then the incentive to revalue for those responsible for the revaluing is very little. They will lose out, and hence, they won't be keen to do it.

The only pressure to revalue the dirham is coming from the non-ruling class, i.e. those of us who wish to perhaps repatriate funds, and of curse the rising cost of living the reduced buying power of the dirham is creating... which is where the inflationary pressure is coming from. If the $US continue to remain low, and doesn't bounce back soon, then perhaps the 'attractiveness of Dubai' as a residence may come into play and force a revaluation... but for the time being... the needs of the few definitely outweigh the needs of the not so few.

* phew *

Hope that explains the situation.

The peg will remain... [21-10-07 article from GulfNews]

http://www.gulfnews.com/business/Economy/10161705.html

Concord wrote:The peg will remain... [21-10-07 article from GulfNews]

http://www.gulfnews.com/business/Economy/10161705.html

Dohhhhhhh

testing 123 we are talking about UAE not Saudi Arabia

arniegang wrote:

Concord wrote:The peg will remain... [21-10-07 article from GulfNews]

http://www.gulfnews.com/business/Economy/10161705.html

Dohhhhhhh

testing 123 we are talking about UAE not Saudi Arabia

I think you should have read the whole article. Also you should pick up today's Gulf News and also Emirates Today as there's further discussion about not moving the peg again.

It is not unlike the government to repeat they won't do something 20 times and then do it, but in this case, when they say they will no be shifting the peg, I think they mean it.

The only relevence i read into the article was that the UAE Bank Govenor was "unavailable for comment".

Gulf 'unlikely to abandon peg'

By Babu Das Augustine, Banking Editor
Published: October 28, 2007, 23:02

Dubai: The Gulf countries including the UAE have no compelling reasons to change their exchange rate policies away from their peg to the dollar, a senior analyst with Moody's Investor Service said in Dubai yesterday.

http://gulfnews.com/business/Economy/10163507.html