Speedy economic recovery adds to National Day joy
https://arab.news/jp3f8
We celebrate Saudi Arabia’s National Day every year on Sept. 23 with national fervor. This year marks the 91st National Day of our great country.
Celebrations for this year’s National Day, like those of last year, are somewhat different from the years before the coronavirus pandemic broke out.
The pandemic not only affected public health around the world, but it also had an adverse effect on the global economy.
Shutdowns to contain the virus resulted in a severe contraction of the global economy and, according to the World Bank, the pandemic caused the deepest recession since the Second World War.
Saudi Arabia was no different from other countries and its economy also suffered.
According to data released by the General Authority for Statistics, the Kingdom’s real gross domestic product declined by 4.1 percent last year. The real oil GDP witnessed a decline of 6.4 percent due to a significant reduction in oil production in the second quarter of last year, in compliance with the OPEC+ agreement. The average price of oil (Brent) from the beginning of 2020 until the end of October was about $41.1 per barrel, compared to $64.1 per barrel for the same period in 2019.
Amid the global crisis, Saudi Arabia soldiered on and introduced several measures to mitigate the impact of the pandemic on its economy
Talat Zaki Hafiz
Amid the global crisis, Saudi Arabia soldiered on and introduced several measures to mitigate the impact of the pandemic on its economy. The Kingdom continued to implement its Vision 2030 Vision Realization Programs to enhance the economy’s resilience and stimulate growth. These measures helped to reduce the negative impact of the pandemic.
The General Authority for Statistics recently released a report revealing 1.8 percent growth in GDP in the second quarter of 2021 compared to the same period last year. This positive result was mainly driven by the growth witnessed in the non-oil sector, which increased by 8.4 percent, while the private sector recorded a positive growth rate of 11.1 percent and the government sector grew by 2.3 percent. On the other hand, the oil sector recorded a decline of 6.9 percent compared to the same period last year.
The number of investment licenses reached about 478 in the first quarter of this year. This represented 36 percent growth compared to the same period last year. Also, the net value of foreign direct investment amounted to SR6.7 billion ($1.8 billion) compared to SR6.1 billion. This represented an 11.3 percent increase compared to the same period last year.
The number of new foreign companies increased by 108 percent in the first half of this year to reach 1,054. And the number of joint projects between Saudis and foreign investors has increased by 45 percent.
The Consumer Price Index for August 2021 has shown a modest increase of 0.3 percent compared to the same month last year. This is considered the lowest CPI level recorded in the last 14 months.
The speed of recovery of the economy has led Fitch Ratings to revise its outlook on Saudi Arabia’s long-term foreign-currency issuer default rating from negative to stable, while affirming the IDR at “A.”
Fitch forecasted that the budget deficit will narrow to 3.3 percent of GDP in 2021.
The Saudi government managed to navigate successfully through a tough period and brought its economy to safety.
• Talat Zaki Hafiz is an economist and financial analyst. Twitter: @TalatHafiz
