Eco­nom­ics of Ra­madan: GDP de­clines, spend­ing in­creases


The Daily News Egypt - - Front Page - By Reem Hosam El-dein

The holi­est month in the Is­lamic cal­en­dar is ap­proach­ing, and things are ex­pected to change. Ra­madan is the ninth month of the Is­lamic lu­nar cal­en­dar. It is the holi­est month for Mus­lims dur­ing which they ob­serve a reli­gious obli­ga­tion to fast, from sun­rise to sun­set. Dur­ing the fast­ing pe­riod, ab­stain­ing from the worldly de­sires be­comes a duty, al­low­ing for a closer re­la­tion­ship with God through prayers, more wor­ship, and com­mit­ting “good deeds.” This re­quires cer­tain changes in the life­style of Mus­lims who fast across the world, as well as a change in the na­ture of the food and bev­er­ages they have dur­ing the two meals of If­tar (break­ing fast) and Suhur (pre-dawn meal) to main­tain their health and en­sure they gain both the spir­i­tual and phys­i­cal ben­e­fits of fast­ing.

As a re­sult of these changes, the re­tail and hos­pi­tal­ity sec­tors see a no­tice­able in­crease in their sales dur­ing the month of Ra­madan.This, in­ter­est­ingly, not only hap­pens in the coun­tries with Mus­lim ma­jori­ties, but also in coun­tries with prom­i­nent Mus­lim mi­nori­ties, ac­cord­ing to Statista.

“Ma­jor new TV se­ries and films are re­leased dur­ing this month,which also af­fects ad­ver­tise­ment sales and prices. Af­ter the Hajj pil­grim­age, Ra­madan is the pe­riod that sees the largest num­ber of pil­grims go­ing to Mecca,” Statista said.

There­fore, spend­ing hikes dur­ing Ra­madan.Ac­cord­ing to re­search car­ried out by YouGov, an in­ter­na­tional mar­ket re­search and data an­a­lyt­ics firm based in the UK, in 2015 on about 3,288 res­i­dents in the re­gion of the Mid­dle East and North Africa (MENA) found out that they spend more money in Ra­madan, and the top pur­chases are food and gro­ceries.

The ma­jor­ity of those who fast find that their life­style only changes a lit­tle dur­ing the holy month, 62% find it easy to fast, and 49% say their work pro­duc­tiv­ity doesn’t change, ac­cord­ing to YouGov. In terms of shop­ping, 60% of MENA res­i­dents spend more dur­ing Ra­madan, 52% shop af­ter If­tar, and 57% save through­out the year for Eid and Ra­madan, with the pur­chases be­ing 47% clothes and 71% food and gro­ceries. About 38% of those who fast in Ra­madan eat out less and 33% eat out more.

More­over, dur­ing the month of Ra­madan, in coun­tries with a Mus­lim ma­jor­ity, the pri­vate and pub­lic sec­tors re­duce the length of their work­days by two or three hours to lighten the phys­i­o­log­i­cal con­se­quences of fast­ing and al­low em­ploy­ees to par­tic­i­pate in Ra­madan-re­lated ac­tiv­i­ties.“A 2011 study by Di­nar Stan­dard, a busi­ness strat­egy pub­li­ca­tion, es­ti­mated that coun­tries with an av­er­age re­duc­tion of two hours per work­day dur­ing the month lost 40 hours of eco­nomic pro­duc­tiv­ity due to the hol­i­day.This av­er­aged to a 7.7% loss in most coun­tries’ monthly gross do­mes­tic prod­uct (GDP),” Global Risk Ad­vi­sors said.

“The pro­duc­tiv­ity of work­ers de­clines in the holy month by 3550% as a re­sult of shorter work­ing hours and the change in be­hav­iour dur­ing this month,” said Samer Sun­nuqrot, an econ­o­mist based in the Jor­da­nian cap­i­tal Am­man, the BBC re­ported.

Mean­while,as pro­duc­tiv­ity de­clines dur­ing the month, spend­ing in­creases greatly due to these Ra­madan-re­lated ac­tiv­i­ties. A 2010 sur­vey by Nielsen In­done­sia recorded a 9.2% growth in sales of con­sumer goods from all in­come lev­els in In­done­sia dur­ing Ra­madan.Sim­i­larly,the cen­tral bank of Saudi Ara­bia has pro­jected that house­hold spend­ing dur­ing Ra­madan in 2014 will reach a record $193bn, ac­cord­ing to Global Risk Ad­vi­sors.

“A 2011 re­port by the Univer­sity of Le­ices­ter economists re­vealed that on av­er­age, stock mar­ket rev­enues in Mus­lim-ma­jor­ity coun­tries dur­ing Ra­madan were al­most nine times higher and far less volatile than they were dur­ing other times of the year. The economists at­trib­uted this so-called “Ra­madan ef­fect” to the rit­u­als as­so­ci­ated with the hol­i­day, which tend to in­cite pos­i­tive emo­tions, and thus, en­cour­age in­vestors to take more risks and buy more stocks,” Global Risk Ad­vi­sors re­ported.

Many changes in the econ­omy seem to hap­pen dur­ing Ra­madan, how­ever, the economies of the coun­tries with Mus­lim ma­jori­ties re­cover quickly within the few weeks fol­low­ing Ra­madan, as ev­ery­thing goes back to nor­mal, in terms of busi­ness and spend­ing.

Tra­di­tional mar­ket set­ting dur­ing the holy month of Ra­madan

Egyp­tians cele­ber­at­ing the holy month at a lo­cal cafe

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