When the Russian rouble lost more than 50 per cent of its value against the dollar towards the end of 2014, there were repercussions across multiple global markets in 2015. In the UAE, total spending through cards issued in Russia saw a decline of 56 per cent in the first three months of 2015 to Dh213 million, compared to Dh485 million in the same period of 2014.

Similar declines of 45 per cent and 57 per cent were witnessed in the following two quarters compared with their corresponding periods in 2014, reaching a two-year low in Q3 2015.

On the other hand, the greenback continued to gain strength on the back of increasing confidence in the US economy, and the higher spending power catapulted US-issued cards to the top, second only to domestic UAE spend over the past two years.

At Russia’s quarterly peak of Dh485 million in Q1 2014, US-issued cards spent Dh1.1 billion in the UAE. At Russia’s quarterly nadir of DH43 million in Q3 2015, US spend continued to be close to the Dh1 billion mark.

Dollar pegs outperform

From the macroeconomic perspective, the stability of the UAE economy, driven by continuing fast-paced diversification into non-oil revenues, has stood like a rock against the fluctuations that have wreaked havoc in major economies around the world in 2015. And card-spending data clearly bears this fact.

Our data shows that spending by UAE-issued cards has remained by far the largest in value over the past two years and has remained steady between Dh4 billion and Dh5 billion per month. The dollar’s strength has also tilted the balance in favour of currencies pegged to the greenback, with spending in the UAE by cards issued in Saudi Arabia coming in a close runner-up to US-issued plastic. Qatari and Kuwaiti spends are also in the top ten list in the UAE.

While overall spending in the UAE continues to go from strength to strength — it grew by 10 per cent in the first nine months of 2015 compared to the same period in the previous year — the mix changes depending on what is happening in the world at any particular time.

Yuan yawns

Other economic/currency meltdowns in the recent past have come from China and Nigeria, for reasons as wide-ranging as a sharp drop in the price of crude oil, internal political instability, a slowdown in economic fundamentals measured by GDP, and the strengthening of the US dollar against almost all the currencies of the world.

There was a time when retailers in the UAE hired Mandarin-speaking staff to cater for the high-spending Chinese. Dubai Duty Free reported that in 2014 the Chinese accounted for 5 per cent of shoppers but 13 per cent of sales.

A 10 per cent crash in the value of the yuan against the dollar at the end of 2014, however, had a spectacular effect on these numbers. Our data show that spending by the Chinese in the UAE dropped from a quarterly high of Dh326 million in March 2014 to almost a third, Dh136 million, in the quarter ended September 2015.

The naira anomaly

I can hear the wannabe data scientist muttering: “Isn’t it obvious that a decrease in rouble or yuan value against the US dollar will translate to a drop in rouble- or yuan-denominated spending? Especially when the dirham is pegged to the dollar?”

Then explain this: When Nigeria devalued its currency, the naira, in November 2014, around the same time that Russia allowed the rouble to float free, spending by Nigeria-issued cards should have dropped too. It didn’t. The level of spending in the first three quarters of 2015 by Nigerian cards continued at the same levels as the first three quarters of 2014.

Did macroeconomics fail? Not really.

To find a solution to this conundrum, our data scientists would need to expand the scope to include variables such as the period in which spending is being tracked and the categories under which the spend is filed. A category-wise breakdown shows that Nigerian spending remains orientated towards categories that support UAE-Africa trade ties and are not affected by currency fluctuations.

Our data gurus also tell me that macroeconomic events produce a slight lag before which their effects are felt on the ground in terms of spending volumes, sources and categories. This lag, however, is not a constant. It is influenced by the type of macroeconomic event, the country or countries involved in it, and the type of spending being tracked.

Power of insight

With 120 nationalities among shoppers, it’s not enough to simply track who buys what and how much at your own store. It is important to peruse all the intelligence gathered from payments data — your own, as well as across the industry.

For the average merchant in the UAE — a retailer of luxury goods, a hotel, a seller of tourism services — keeping up with macroeconomic news from across the world becomes a necessary part of ongoing business strategy.

As an organisation that processes more than 50 per cent of transactions in the UAE, we find ourselves in the position of being a vault of formidable business intelligence. As a responsible local company with roots deep in the community, it’s part of our mandate to make this available to merchants. Access to such data insight can help them plan their inventories and marketing initiatives, leading to a stronger UAE economy.

For us, data is not simply a long string of numbers that we store in a relational data base. Data is the strong foundation on which we help our stakeholders develop effective medium- and long-term business strategy.

— Bhairav Trivedi is Chief Executive Officer, Network International.