Arab News, Saturday, Sep 5, 2020 | Muharram 17, 1442
Saudi economic recovery picks up as lockdowns ease
Saudi Arabia: Early evidence of economic recovery in Saudi
Arabia came in statements from two ministers at the sharp end of the Kingdom’s
strategy to combat the effects of the coronavirus disease (COVID-19) pandemic.
Saudi Minister of Investment Khalid Al-Falih announced that 506 new business
licenses were granted in the first half of this year, with a burst in activity
in June partly compensating for a big fall-off in April and May when lockdowns
severely curtailed global investment activity.
The minister said he was “encouraged by the resilience demonstrated by the Saudi
economy in the first half of 2020.”
He added: “The positive economic data for June gives us confidence that the
Saudi economy is rebounding from the impact of COVID-19 and that growth in
foreign investment will begin to regain the strong momentum we have seen in
recent years.”
Separately, Mohammed Al-Jadaan, the minister of finance and economic planning,
told a virtual forum that some sectors were showing signs of recovery as
lockdowns and curfews ended toward the end of the first half.
Domestic tourism was ahead 18 percent in June over last year, while hotel
occupancy – virtually at zero earlier in the spring – was back to between 85 and
90 percent, Al-Jadaan said.
“We think the results are very positive for June since we reopened the economy.
We’re getting back, but we need to be cautious and remember we are not out of
the woods yet.”
That note of cautious optimism was echoed by Al-Falih. “This has undoubtedly
been a year of unprecedented challenges – and the path of the economy in the
near term will depend on the virus,” he said.
The Ministry of Investment highlighted more encouraging evidence of a recovery.
“Other recent data also pointed to an increase in economic activity toward the
end of Q2 (the second quarter of the year) – suggesting that the economy may be
experiencing significant catch-up growth as the Kingdom cautiously lifts some
lockdown measures,” a ministry statement said.
It quoted figures from the Saudi Arabian Monetary Authority (SAMA) showing that
point-of-sale transactions witnessed a 78.5 percent year-on-year jump in June to
a record level of $9.9 billion (SR37 billion), following sharp declines in April
and May.
Likewise, data released by the Ministry of Industry and Minerals Resources
showed that investments by newly licensed industrial factories amounted to $581
million in June, following a sharp slowdown in April and May.
Al-Jadaan said that the COVID-19 outbreak had hit the Saudi economy “like a
steam train” in March. “We did not really expect that. It has been the most
challenging year for 100 years, and everyone in the world has suffered,” he told
an online forum organized by financial information firm Euromoney.
The finance minister added that the Vision 2030 reforms had helped the Kingdom
implement its response to the pandemic and he underlined the strength of the
financial reserves held by SAMA and other financial institutions.
He noted that around 50 countries had been downgraded by credit ratings agencies
because of the economic hit from the pandemic but that Saudi Arabia had retained
“stable” status, and he highlighted the resilience of local debt markets and the
good reception given by international markets to Saudi Arabian bond issuance.
American, British, and Indian firms were the biggest contingent in the new
license data, investing in entrepreneurship, education, financial services, and
housing, as well as industrial, manufacturing, and information technology.
Al-Jadaan praised the work of the G20 – the leaders’ organization due to meet in
Riyadh in November – in raising funds for medical projects including the search
for a vaccine against the virus.