COVID-19 which originated in China late 2019, has infected more than 1.3 million people worldwide.
Most recent data suggests that the economic impact of the pandemic will be comparable to 2008 – 09 economic crisis or even worse.
Share markets have taken a hit globally.
Unemployment rates have shown great rise. International Labour Organisation warns of 25 million layoffs.
More than 100 countries have imposed travel ban.
Almost every sector has been hit and fitch forecasts a decline of 2% in global GDP.
"ICAEW states that oil sector is expected to boost GDP of KSA by 3.8% despite decline in growth of non-oil sectors."
Share markets have taken a hit globally.
Unemployment rates have shown great rise. International Labour Organisation warns of 25 million layoffs.
More than 100 countries have imposed travel ban.
Almost every sector has been hit and fitch forecasts a decline of 2% in global GDP.
"ICAEW states that oil sector is expected to boost GDP of KSA by 3.8% despite decline in growth of non-oil sectors."
Economic Impact on Oil Sector of KSA
Oil prices fell from $73 per barrel on January 3, 2020 to $27 per barrel in March 2020 due to ongoing supply war between KSA and Russia. This has affected fiscal plans across the middle east region.
Pandemic is affecting global oil demand significantly with forecasts showing decline in demand by 700,000 barrels a day in Q1, 2020 .
KSA and other countries are planning to increase oil production which is leading to rare combination of increasing supply and decreasing demand.
Brent price forecasts shows average of $40 a barrel for 2020 with downside risk.
"Saudi Aramco is better positioned to survive low oil prices due to lower production costs. KSA plans to increase oil production to 11.5 million barrels a day from under 10 million in recent months which will largely contribute to economic growth. Ports and customs in the country are not affected by pandemic."
" Oil industry is not immune to impact of COVID-19 on oil field workers. KSA government is likely to absorb labor market entrants owing to layoffs in private sector."
Pandemic is affecting global oil demand significantly with forecasts showing decline in demand by 700,000 barrels a day in Q1, 2020 .
KSA and other countries are planning to increase oil production which is leading to rare combination of increasing supply and decreasing demand.
Brent price forecasts shows average of $40 a barrel for 2020 with downside risk.
"Saudi Aramco is better positioned to survive low oil prices due to lower production costs. KSA plans to increase oil production to 11.5 million barrels a day from under 10 million in recent months which will largely contribute to economic growth. Ports and customs in the country are not affected by pandemic."
" Oil industry is not immune to impact of COVID-19 on oil field workers. KSA government is likely to absorb labor market entrants owing to layoffs in private sector."
Economic Impact on Non-Oil Sectors of KSA
Effect of pandemic is undermining KSA’s effort of diversification by the inclusion of non-oil sectors in the economy .
Temporary restrictions on international travel, events, market centers and many industries will lead to decline in growth of non-oil sectors to 0.7% from 2.8% respectively .
Travel & Tourism which is major revenue generating non-oil sector is among the worst hit. Government has banned unnecessary travel to Mecca.
Congestion levels in Riyadh and Jeddah are at record low which is largely affecting real estate sector.
Growth in Healthcare and Essential goods will be seen.
According to Mckinsey’s survey majority of the household report decrease in income which is affecting retail sector.
SAMA has reduced lending rates by 50 basis points to encourage consumer spending and facilitate SMEs. Consumer finance will see a shift towards cashless.
"KSA government has announced stimulus package of SAR 120 billion for private sector aimed at reducing impact of pandemic and stimulate growth and employment in non-oil sectors of the economy."
Travel & Tourism which is major revenue generating non-oil sector is among the worst hit. Government has banned unnecessary travel to Mecca.
Congestion levels in Riyadh and Jeddah are at record low which is largely affecting real estate sector.
Growth in Healthcare and Essential goods will be seen.
CAccording to Mckinsey’s survey majority of the household report decrease in income which is affecting retail sector.
SAMA has reduced lending rates by 50 basis points to encourage consumer spending and facilitate SMEs. Consumer finance will see a shift towards cashless.
"KSA government has announced stimulus package of SAR 120 billion for private sector aimed at reducing impact of pandemic and stimulate growth and employment in non-oil sectors of the economy."