UAE 70,000 net population loss in Q2

The most interesting statistic to emerge this week is the 70,000 net subscriber loss by the UAE telecom provider Etisalat in the second quarter. Now with mobile penetration actually above 100 per cent this is about as good a proxy for the national population change as it is possible to get.

So how significant is a population loss of 70,000 to the UAE? With a population of just over six million this represents a loss of slightly more than one per cent.

Less than forecast

That is certainly a lot lower than the eight per cent population loss predicted for 2009 by UBS. But of course the year is not over yet. However, the traditionally buoyant autumn season makes further net losses unlikely especially with oil prices strong.

But to loose 70,000 people is still a significant event. It would be more significant still if the loss was concentrated into one nationality or skill-set. But we do not have this data (see this article for what is available).

As one website reader commented, does that mean 40,000 cars have been abandoned? Certainly not as most people leaving will have sold their cars if possible, but that said it must have left another set of bad loans on the books of local banks.

The loss of population is also putting a downward pressure on local housing rents, down by up to a half on the peak rentals of a year ago. This is bad for landlords but puts money in the pockets of the remaining tenants and that does seem to be reflected in better than expected retail sales, at least for the non-luxury end.

One-off decline?

The next question is surely whether this population decline represents a one-off event or becomes a trend. With the tentative global economic recovery and oil price surge it looks to be a one-off event at the moment.

Yet if the global economy goes into a double-dip recession as government support packages are wound up and interest rates rise then the UAE could have a second round of population loss. Such a recession would also likely crash oil prices leading to a cash flow squeeze in the emirates.

Therefore it is far from certain if the population decline is over or has just begun. On the other hand, the evidence to date suggests that predictions of big population falls are wide of the mark. Leaving the UAE to go back to a recession at home remains an unattractive proposition for most residents.