The Ramadan Economy

By: EW News Desk Team   Date: 2 August 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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02 August 2011

Ramadan is the ninth month of the Islamic calendar and a time when Muslims around the world fast for 30 days and devote themselves to prayer. In countries where Islam is the majority religion, daily work schedules are often turned upside down during Ramadan.

"Most government offices and most national businesses tend to slow down or almost shut down, so that people can basically rest during the hot daylight hours," says Riz Khan, a broadcast journalist who has worked with BBC, CNN and most recently Al Jazeera English in Washington D.C. "Everything comes to life in the evening after sunset."

On some stock markets, there's reportedly a "Ramadan Effect," a month-long rally. "During the Holy Month, we find that on average, stock returns are almost nine times higher in predominantly Muslim countries than during other times of the year," finance professor Ahman Etebari recently told the Voice of America.

However the holy month also means holy food, such as dates which Muslims are encouraged to break their fast with.

In the U.S., the market for halal-certified foods has soared in the past decade. The Islamic Food and Nutrition Council of America (IFNCA) recently estimated an 80% growth in the market for halal-certified ingredients and food products since 2005. "This increased interest for U.S. halal market ingredients and products," according to the IFNCA statement, "may reflect the overall estimated $170 billion U.S. dollar purchasing power of American Muslims."

In the Muslim world. this month also means new clothing, homewares, furniture and special entertainment. Ramadan ends with Eid Al Fitr, a celebration of feasts and gift-giving. Like Hanukkah or Christmas, Eid and other Muslim holidays have become major sales opportunities for retailers.

But the main highlight of Ramadan is the pilgrimage to Mecca. Pilgrimage visas are 1.1 million up on 2010 making for an unprecedented rise in one of Saudi Arabia's most important sources of non-oil revenue.

According to 2010 figures from the Madinah Chamber of Commerce and Industry, pilgrimages generate more than 30 billion Saudi riyals (circa US$9.3 billion) in annual revenues for the Kingdom. Though the contribution to the economy is dwarfed by Saudi's immense oil profits, Umrah and Hajj visits contribute a fifth of the country's non-oil GDP. It is estimated that each pilgrim brings an average of around $3,000 into the Saudi economy.

Sources: Ahram Online and Daily Finance


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