Saudi economy shrinks 7% and unemployment to 15%

Official data showed that the Saudi economy shrinks 7% in the second quarter, in an indication of the depth of the repercussions of the oil crisis caused by Crown Prince Mohammed bin Salman, and the Coronavirus.

The world’s largest oil exporter is facing the worst economic downturn after the Covid-19 pandemic reduced global demand for crude and virus containment measures that have hit the domestic market.

The General Authority for Statistics said the decline in the private sector growth rate was 10.1%, and the government sector 3.5%.

In the first quarter, the Saudi economy recorded a contraction of 1% due to the partial impact of the oil price collapse and the pandemic, which worsened last March.

The non-oil sector – which is the focus of Saudi reforms aimed at diversifying the economy away from oil revenues – was the most affected in the second quarter, shrinking 8.2%. In comparison, the oil sector declined by 5.3%, according to the Statistics Authority.

The surplus in Saudi Arabia’s foreign trade balance (oil and non-oil) had declined by 65.1% on an annual basis until July 2020.

The trade balance surplus reached $ 23.25 billion during the first seven months of this year, and the surplus in the trade balance of Saudi Arabia amounted to $66.7 billion during the corresponding period of 2019.

The value of merchandise exports (oil and non-oil) decreased by 37.4%, to reach 97.63 billion dollars, and imports fell 16.7% to reach 74.37 billion dollars.

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The value of oil exports to Saudi Arabia – the largest oil exporter in the world – during the aforementioned period decreased by 42.8% to reach about $ 69 billion.

Oil prices were severely affected this year as a result of the repercussions of the Coronavirus outbreak on global demand for crude, which is the primary source of income for Saudi Arabia.

The merchandise trade surplus (oil and non-oil) of Saudi Arabia decreased by 25.7% during 2019 to $ 117.2 billion, compared to $ 157.8 billion in 2018.

Due to the drop in oil prices, the Kingdom reduced its production from about 10 million barrels per day to 8.5 million barrels per day, in compliance with the agreement of the “OPEC Plus” coalition since the beginning of last May, and thus the quantity of exports decreased.

According to the figures of the joint initiative for oil data “Judy”, Saudi Arabia’s crude oil exports reached 5.73 million barrels per day last July, and production is about 8.5 million barrels per day.

Saudi Arabia comes third in the volume of production, after Russia and the United States.

In contrast, the unemployment rate among Saudis increased during the second quarter of 2020 to 15.4%, compared to 11.8% during the first quarter of this year.

According to data issued by the General Authority for Statistics, the Saudi unemployment rate was 8.1% for males and 31.4% for females.

The overall unemployment rate (Saudis and foreigners) rose to 9%, compared to 5.7% in the first quarter.

The local market was affected by the Coronavirus, which necessitated the imposition of a curfew and the suspension of many activities during the second quarter.

The number of workers reached 13.63 million, of whom 10.46 million were foreigners (76.7%), and 3.17 million Saudis (23.3%).

And before Corona, the Ministry of Economy had expected a decline in the unemployment rate among Saudis to about 12% this year.

Source: Reuters