The United Arab Emirates (UAE), determined to improve its statistical system, is constructing a monthly consumer price index—set for introduction in almost two years’ time—with the support of IMF technical assistance.
In 2005, the UAE, faced with growing oil revenues and concerned that shortcomings in the country’s federal statistical system imposed serious constraints on analysis and policy formulation, approached the IMF to discuss collaboration for the development of key statistical indicators, particularly a monthly consumer price index (CPI).
Since then, with the help of the IMF, progress has been made in constructing this closely watched economic statistic, which is now set for introduction in May 2009. The UAE authorities have also expressed interest in additional technical assistance for implementing a wider strategy aimed at improving coordination among the seven emirates’ main data-producing agencies.
Need for good data
Good economic data are a precondition of effective macroeconomic management. With the complexity of modern economies and the lags inherent in macroeconomic policy instruments, a country must have the capacity to promptly identify any adverse trends in its economy and to apply the appropriate corrective measure.
The CPI, whose percent change is a measure of inflation, is among a country’s most closely watched national economic statistics. In the UAE, the Ministry of Economy compiles an annual CPI. This index covers the whole country, but it suffers from methodological shortcomings and is disseminated with a lag of three months—not quickly enough to meet users’ needs.
Continued dialogue between UAE authorities and IMF staff, which resulted in a solid understanding of the country’s statistical needs and constraints, prepared the ground for rapid development of the monthly CPI, starting in early 2007. An IMF team visited Abu Dhabi, provided technical advice based on cross-country experience, and agreed with the authorities on a work plan for the development of the index.
At first, an interim price index would be released, in advance of the more robust CPI, to satisfy the need for more timely information. And a monthly CPI, compiled in accordance with international standards, is set to be released in May 2009.
Claudia Dziobek and Florina Tanase
IMF Statistics Department