IMF ‘is too pessimistic’ on Saudi economic prospects

The Kingdom had emerged from strict lockdowns imposed in March. (Shutterstock)
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Updated 01 July 2020

IMF ‘is too pessimistic’ on Saudi economic prospects

  • The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year
  • The risks to recovery came from a second wave of infection

DUBAI: Saudi Arabia does not share the International Monetary Fund’s pessimism about its economic prospects, the central bank governor said on Tuesday.
The IMF has predicted that COVID-19 lockdowns and the fall in oil prices would shrink the Saudi GDP by 6.8 percent this year, but that did not correspond with the views of the Kingdom’s independent experts, Saudi Arabian Monetary Authority chief Ahmed Abdulkarim Alkholifey said.
“The IMF forecasts are much more pessimistic than ours,” Alkholifey said. “The IMF must have its own reasons for reaching that. There have been big changes and huge modifications from the pandemic.”
He said the Kingdom’s own projection for 2020 was the responsibility of official statisticians, but the economy was down 1 percent in the first three months of 2020. “There certainly has been a recession, but there is no need to be that pessimistic,” he said.
The Kingdom had emerged from strict lockdowns imposed in March, economic activity had returned to pre-pandemic levels and retail sales had surged ahead of Wednesday’s increase in VAT, Alkholifey said.
The risks to recovery came from a second wave of infection, a deeper global slowdown, and geopolitical tensions, he said, and the main impact on Saudi business would be seen when the central bank’s multibillion-dollar support packages ended.
IMF Middle East director Jihad Azour said measures taken by Gulf states to mitigate the effects of the pandemic had been “acceptable” at about 2-3 percent of GDP, and capital flight was being reversed.


Saudi labor force figures on the rise before pandemic

Updated 08 July 2020

Saudi labor force figures on the rise before pandemic

  • Trend driven by increase in female employment, but second quarter data will reveal impact of virus on jobs

RIYADH: Saudi unemployment dipped below 12 percent in the first quarter for the first time in four years — but the government data does not reflect the impact of the coronavirus COVID-19 pandemic.

The Labor Force Survey published by the General Authority of Statistics (GASTAT), which was conducted in January 2020, before the pandemic, showed that the total unemployment rate amounted to 5.7 percent in the first quarter, unchanged compared to the first quarter of the previous year.

Regional economies have been hit by the double whammy of the coronavirus and weak oil prices which has forced major employers to lay off staff throughout the Gulf and led to the departure of thousands of expatriate workers.

Last week the International Labor Organization warned the outlook for the global jobs market in the second half of 2020 was “highly uncertain” and that employment was unlikely to return to pre-pandemic levels this year. 

“The estimates have revised upwards considerably the damage done to our labor markets by the pandemic,” said Guy Ryder, ILO director-general.

The Saudi unemployment rate decreased to 11.8 percent in the first quarter of 2020, from 12.5 percent the same period in 2019, and compared to 12 percent in the last quarter of 2019. 

The figures also reflect an increase in the total labor force participation rate to 58.2 percent in the first three months of 2020, a jump of 1.8 percentage points compared to the same period in 2019.

GASTAT said that the stability in the unemployment rate and the increase of labor force participation rate were due to the increase in the number of employees in the survey.

That trend was driven by a decrease in the Saudi female unemployment rate that stood at 28.2 percent in the first quarter of 2020, 2.7 percentage points lower than the last quarter in 2019. 

Meanwhile the Saudi male unemployment rate rose to 5.6 percent, 0.6 percentage points higher than the rate of last quarter in 2019.

The statistics show that there are almost 9.98 million people in employment across the public and private sectors.

About 3.2 million of them are Saudis. The figures exclude workers in the security and military sectors. 

The data also reveal that there are 3.66 million domestic workers in the country, all of them non-Saudis.

The labor market statistics are compiled from two main sources. The first is the labor force survey, which is a household survey that is carried out by GASTAT and provides the most important indicators of the labor market, such as the unemployment and labor force participation rates.

The second source is administrative data which is recorded and updated by government agencies related to the labor market.