RIYADH: 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.