Saudi economic recovery picks up as lockdowns ease

DUBAI: 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 pandemic.

Khalid Al-Falih, minister of investment, announced that 506 new business licences were granted in the first half of 2020, 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 give 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 for finance and economic planning, told a virtual forum that some sectors were showing signs of recovery as lockdowns and curfews ended towards the end of the first half.

Domestic tourism was ahead 18 per cent 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 result are very positive for June since we re-opened 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 investment ministry said there was other encouraging evidence of a recovery.

“Other recent data also pointed to an increase in economic activity towards the end of Q2 – suggesting that the economy may be experiencing significant catch-up growth as the Kingdom cautiously lifts some lockdown measures,” a statement said.

The investment ministry quoted figures from the Saudi Arabian Monetary Authority (SAMA) showing that point-of-sale transactions saw a 78.5 percent year-on-year jump in June to a record level of $9.9 billion, following sharp declines in May and April.