How Covid-19 Impact the Economy of Saudi Arabia?
Emergence of COVID-19
It has been two years since the first case of the deadly virus COVID-19 emerged in China, since that outbreak. COVID-19 has affected hundreds of countries with millions of verified cases. Brutal deaths around the globe leaving the entire world miserable.
The lethal pandemic not only affected the minor states but the economically giant and developed countries like the United States of America, the United Kingdom, and even the Kingdom of Saudi Arabia could not be spared by the fatal consequences of the virus and had to face major downfalls both in the economy and in their environment.
Kingdom of Saudi Arabia and COVID-19
The radical and severe after-effects of the pandemic have left Saudi Arabia with no other choice than to accept the downfall, plan a new strategy according to it, and reform. The Finance Minister of Saudi Arabia in his recent interview with one of the national news channels confirmed that the dependence of the country primarily on its oil production has made it suffer relatively more than any other country in the world.
Nonetheless, the authorities were firm that even though the country is in a powerful yet dreadful situation, it is capable of facing the decline and the financial shortfall by devising new policies and tactics of directing the finances in the public. (Basahel Milyani and Brahimini, 2021)
Impact of COVID-19 on the economy of Saudi Arabia
The Kingdom of Saudi Arabia like other countries had a massive hit on its economy and faced huge decreases in the finances of the country. As the finance minister of Saudi Arabia addressed, the high dependency on oil made them suffer the greatest.
However, the non-petroleum industry was also not past the worst. Education, Tourism, Entertainment every industry had to shut and stop their operations as per the standard operating procedures leaving the economy of the country to agonize greatly.
Impact of Oil Industry
Saudi Arabia even though being the petroleum giant had to go through major collapses. It was a dual breakdown for the country since the oil prices dropped to almost half of the actual price working as a catalyst in the aftereffects of COVID-19.
The oil and gas segment generating almost half that is 50 per cent of the Gross Domestic Product (GDP) for the country and approximately 70 per cent of the entire export revenue, witnessed a colossal decline. Notwithstanding the government’s strategies to upgrade and elevate the production of oil by 25 to 30% from their recent arrangements with the Organization of the Petroleum Exporting Countries (OPEC).
Although, the Kingdom of Saudi Arabia planned quite well, however, the pandemic anyways led to a severe drop in the GDP and unearned national incomes, having to lose the expected oil revenues for about more than 60 per cent of the total budget for the fiscal year 2020. (RCO, 2020)
Impact of Tourism and Air Travel
One of the foremost features of COVID-19 is its rapid contagiousness. It started from Wuhan, China in December 2019 and only in a few months spread all around the globe. The main reason behind such hasty spread was frequent commutes and travels of people from one state to another.
To control the spread, World Health Organization (WHO) advised restricting the travels to and from the countries with a greater number of cases. (WHO, 2021)
With the travel bans to and from Saudi Arabia as well, the demand for hotels, airlines, and tourism-related activities observed an immense downfall that consequently made the owners banish some of the employees to save them some costs. Thus, resulting in unemployment in the country.
Impact on Entertainment Industry
With the excessive curfews and lockdowns, the standard operating procedure set for social and physical distances; the entertainment industry also got affected severely. Businesses like;
- Event industry
All these businesses had to face the unexpected loss with no hope of near future recovery of the lost revenues.
Impact on Manufacturing
Manufacturing was yet another industry suffering from great losses. Due to lockdowns affecting the supply chain networks, not only decreasing the demand but also creating unemployment. Decreased demand proportionately decreases the production and thus results in laying off the workers to help the companies save their money in crises.
Positive changes due to COVID-19
Although the pandemic of COVID-19 has been so far a complete disaster, however, there are some industries not only in the Kingdom of Saudi Arabia but around the globe that have benefited from it. For example;
- Medical Industry
Businesses dealing with medical supplies like antiseptics, antibacterial and the like witnessed upsurge in their sales due to excessive precautionary measures adopted around the globe.
Online deliveries became a norm during the pandemic. Social distancing and lockdowns making people stay locked up in their homes made them dependent on online shopping increasing the industry demand.
Lockdowns also made the children stay indoors and delve into e-learning making the websites like assignment help services become familiar and famous among the students worldwide.
Future Plans of the Kingdom of Saudi Arabia
Since the country had to face a massive hit due to its sole reliance on oil production, Saudi Arabia has now launched a new initiative named as ‘Vision 2030 Program’ that would work in other major specialties of the country other than petroleum.
KSA has envisaged achieving its set objectives for the 2030 program by Vision realization programs. Which would include National transformation programs. Emphasizing on reforming the Kingdom’s economy excluding the oil and gas sector. Including other of its fortes like Traveling and Tourism.
Due to the current travel restrictions, tourism is shut down at the moment. However, the country is adamant about resuming with Pilgrimage and other religious tourism called Hajj and Umrah respectively.
Although the current reduction of oil prices and strict operating procedures might indeed affect Vision Program 2030. Nonetheless the Kingdom has resolved the earlier issues and is capable of rejuvenation. These reforms once set can become a great source of Economics assignment help for the students studying in-depth about the course.
Basahel Milyani and Brahimini. (2021). IMPACT OF COVID-19 ON SAUDI ARABIA’S ECONOMY. Jeddah.
RCO, K. (2020). Socio-economic impact of COVID-19 and measures taken in Kingdom of Saudi Arabia (KSA). Riyadh.
WHO, W. H. (2021). Coronavirus disease (COVID-19) travel advice. New York.