Saudi Arabia’s economy slightly contracted in the first quarter as the kingdom’s voluntary oil production cuts offset a rebound of the non-oil sector to pre-pandemic levels.
Flash estimates released Monday by the General Authority for Statistics show that the non-oil sector grew 3.3% from a year earlier, the strongest since 2019, while the oil sector shrank 12%, the most in at least ten years as a result of ongoing crude production cuts agreed by Opec+ since last May.
The flash estimates are subject to revision and final figures are scheduled to be released on June 14th.
With consumer spending picking up during the Ramadan and Eid holiday season, economic recovery is expected to remain on track as the oil cuts are now being scaled back and the vaccination campaign continues to expand. Saudi Arabia is also planning to lift most restrictions on international travel next week, bringing back another measure of normalcy after a turbulent year.
The International Monetary Fund said earlier this month that it expects the kingdom’s economy to grow 2.1% in 2021 after shrinking 4.1% in 2020.
“Overall, the Q1 GDP figures were a bit better than we had expected and the risks to our forecast for the Saudi economy to expand by 2.0% this year now lie to the upside,” Jason Tuvey, senior emerging markets economist at Capital Economics, wrote in a note to clients.
Hajj under special conditions for second year
Saudi Arabia will again organise the Muslim hajj pilgrimage to Mecca under special conditions to limit the spread of Covid-19, the government said in a statement published Sunday by the state news agency:
The Ministry of Hajj and Umrah announced the Kingdom of Saudi Arabia’s intention to hold Hajj ritual for this year 1442 AH, in a manner that ensures preserving the health and safety of pilgrims, in accordance with the health, security and regulatory controls and standards, so that pilgrims can perform their rituals easily and in a safe environment.
The Ministry affirmed that the health authorities in Saudi Arabia are continuing to assess conditions and take all measures to ensure preserving human health, pointing out that the details of the controls and operational plans for this year’s Hajj will be announced later.
The kingdom allowed only a limited number of domestic pilgrims to perform hajj last year. Allowing a small number of foreign pilgrims into the kingdom under strict health and precautionary measures for this year’s hajj is an option that remains under discussion. A spokesman for the minister told local media that more details about this year’s rituals, including the number of pilgrims, would be revealed in due course. “What we can confirm is that this year’s hajj will be safe and healthy for all pilgrims, whether they are coming from inside or outside the kingdom,” he said.
Jeddah-based daily Okaz reported in March that the government plans to make it mandatory for all those who plan to perform hajj to be immunised. Additionally, authorities in the holy cities of Mecca and Medina are working to achieve at least 60% vaccination rates for their residents before the hajj seasons begins in the second week of July. The pilgrims would also be required to quarantine for 72 hours and undergo a PCR test after arrival in the kingdom, the newspaper said.
Meanwhile, the Ministry of Human Resources and Social Development announced last week that all workers returning to office in all sectors would be required to have received a Covid-19 vaccine. MHRSD did not say when the decision would come into effect, but it called on employers to urge their employees to take the vaccine in preparation to safely return to the workplace as more restrictions are expected to be lifted in the coming months.
Making vaccination mandatory for all workers in both the public and private sectors will basically cover the majority of the kingdom’s adult population. This should be a good thing as the country seeks to achieve herd immunity, but it goes against previous comments by health minister Tawfiq al-Rabiah who told the press after receiving his first jab last December that “the vaccine will not be mandatory, it will be optional.”
More than ten million doses of the vaccines have been administered nationwide so far, but there are concerns that constrained supplies and vaccine hesitancy continue to hamper efforts to bring the pandemic under control and fully reopen the economy, especially after the country resumes international travel in the coming days.
The Ministry of Interior said Monday that unvaccinated foreign travellers entering the kingdom would be subject to a week-long quarantine. Cost of the quarantine would be included in their ticket price. They must have valid health insurance to cover the risks of coronavirus and undergo a PCR test on arrival and on the seventh day of quarantine, the ministry added. Airline staff and crew, diplomats, vaccinated travellers, health staffers, truck drivers and marine workers are exempted from this rule.
The ministry also amended the fines on social gatherings and retail outlets that violate precautionary measures. A maximum limit of 20 people will still be in place for gatherings during Eid, which begins in Saudi Arabia on Thursday. The kingdom reported a total of 428,369 cases and more than 7,000 deaths of coronavirus so far.
Saudi Arabia condemns Israeli attacks in Jerusalem
Qatar ruler Sheikh Tamim bin Hamad Al Thani visited Saudi Arabia on Monday for the first time since Gulf states signed an agreement to work on resolving their dispute and end the boycott that had badly damaged relations between the neighbours. He was greeted at Jeddah airport by Crown Prince Mohammed bin Salman.
The two leaders discussed “bilateral relations between the two brotherly countries, aspects of bilateral cooperation in various fields and ways to enhance and develop them” during their meeting, according to a readout by the official Saudi Press Agency.
The meeting comes amid reports of a major corruption investigation in Qatar and a flurry of diplomatic activity in the kingdom in recent days, including visits by the Prime Minister of Pakistan and the foreign minister of Turkey. The talks also coincide with rising tensions in Jerusalem after Israeli forces clashed with Palestinian protesters.
Saudi Arabia on Tuesday strongly condemned “the blatant attacks carried out by the Israeli occupation forces” on worshippers at al-Aqsa Mosque. This followed a previous statement issued Saturday where the foreign ministry said the kingdom “rejects Israeli plans and procedures to evacuate Palestinian homes in Jerusalem and impose Israeli sovereignty over them.”