EFFECT OF CORONAVIRUS CRISIS ON THE GLOBAL ECONOMIC RELATIONS IN SAUDI ARAB

Introduction

Coronavirus has affected the economies of many countries worldwide. Both the developed and the developing countries have suffered hugely from the crises that the virus has caused. Saudi Arabia has no exception. The Arabian Peninsula and the United Arabs Emirates have been leading economies in the Middle East (Turak, 2020). However, the spread and growth ofin the region have caused severe effects in the economy of Saudi Arabia (Fulton, 2020). Most of the effects are projected by economists to worsen in the coming days if the virus continues to spread within and outside the countries.

Impacts to the global economic relations in Saudi Arabia

Weakened ties between Saudi Arabia and its global partners

The suspension of the domestic and international transport and the closure of most of the shops and supermarkets in the country will affect the business activities. The country is already urging the residents to stay at home to minimize the spread of the disease except for the people who are involved in the essential services (Kingsly and Henri, 2020, 4). Consequently, most of the economic activities have halted in the country, crippling the trade with international partners.

Conflict in the oil prices

Oil is the primary economic resource for Saudi Arabia. The past few months have seen the country battling with the economic repercussions of the rising cases of the COVID-19 and the oil price war. Immediately as the cases of the COVID-19 started to rise, an oil price war hit the Gulf region that resulted from Russia and Saudi Arabia, making the prices of the crude oil to drop to the lowest levels for the first time in 17 years (McKibbin, 2020, 45). Collectively, the Gulf region could be facing the gravest and most serious economic tests during this time when they are hard-hit in the health sector as well due to the outbreak of COVID-19. The prices of oil in the country slipped to below $25 because of the falling demands in the country and outside following the outbreak of the COVID-19 as well as the price wars with Russia. Hence one of the significant effects of the epidemic on the global economic relations in Saudi Arabia was a decline in oil price.

Undercutting of religious tourism

Coronavirus has led to the loss of jobs among people in the tourism sectorBesides, the revenues from the tourist businesseshe Arabian Peninsula has declined significantly. More specifically, both local and international tourism has been suspended, leading to a reduction of government revenue from tourism. The Umrah pilgrimage generates about 10 per centthe GDP of Saudi Arabia (Abigail, 2020). However, this sector has been crippled by the crisis caused by the Coronavirus outbreak in the country (Law 2020). Saudi Arabia halted the annual Umrah pilgrimage temporarily, halting even the plans that the country had, aimed at boosting all types of tourism in the country by the year 2030.

Conclusion

Coronavirus crisise global economic relations in Saudi Arabia has affected different economic sectorsuch asil industry, tourism, local and international trade. Consequently, the country’s economic performance has worsened, mainly because the significant sources of revenue have been affected. As far as the crisis will continue, the economic performance of the country and the countries that depend on Saudi Arabia will continue to deteriorateontaining the virus is currently the highest priority issue for the Saudi government and its international partners.

References

Abigail, Ng 2020, ‘Three ways the Coronavirus could have an impact on Middle East economies’, viewed 3 April 2020, https://www.cnbc.com/2020/03/12/three-ways-the-coronavirus-could-impact-middle-east-economies.html

Fulton, J 2020, ‘The impact of Coronavirus on Gulf economies’, viewed 3 April 2020, https://www.atlanticcouncil.org/blogs/menasource/the-impact-of-coronavirus-on-gulf-economies/

Kerr, S and Andrew 2020, ‘Gulf economies rocked by Coronavirus and oil price war’, viewed 3 April 2020, https://www.ft.com/content/b7a7902a-68ff-11ea-800d-da70cff6e4d3

Kingsly, K and Henri, K 2020, ‘COVID-19 and Oil Prices, viewed 3 April 2020,’ SSRN 3555880

Law, B 2020, ‘As Coronavirus Spreads, the Gulf’s Economic Prognosis Is Not Healthy’, viewed 3 April 2020, https://www.fairobserver.com/region/middle_east_north_africa/covid-19-coronavirus-gulf-economies-saudi-arabia-oil-finance-news-18811/

McKibbin, W and Fernando, R 2020, The economic impact of COVID-19, Economics in the Time of COVID-19, viewed 3 April 2020.

MEE and agencies 2020, Coronavirus: Saudi Arabia prepares $30bn package for the economy, viewed 3 April 2020, https://www.middleeasteye.net/news/coronavirus-saudi-arabia-prepares-30bn-package-economy

Turak, N 2020, ‘Saudi Arabia announces $32 billion in emergency funds to mitigate oil’, viewed 3 April 2020, https://www.cnbc.com/2020/03/20/coronavirus-and-oil-saudi-arabia-announces-32-billion-stimulus.html