July 2021 Quest Report: Analysis of five key economies in MENA
The Economist Corporate Network is the Middle East’s key platform for C-Suite business leaders to access insights and analysis of local and regional political economies and the prevailing global conditions shaping them. As such, I would like to share ECN’s monthly QUEST report. This report keeps you updated on the economic performance of five of the most significant economies in the region, namely: Qatar, the United Arab Emirates, Egypt, Saudi Arabia and Turkey.
As was largely expected, Saudi Arabia’s government has announced that the annual haj pilgrimage—which is due to begin in mid-July—will be restricted to 60,000 Saudi Arabian citizens and residents aged between 18 and 65, barring foreign visitors for a second consecutive year owing to the coronavirus pandemic.
In the words of US baseball legend and notorious malapropist Yogi Berra: “It’s like déjà vu all over again.”
The annual event is both a major revenue-earner (worth around $12bn or 2% of Saudi’s total GDP and 4% of its non-oil GDP) and a source of prestige—affirming the kingdom’s position, and that of its ruling family, as leaders of the Islamic world. The lateness of the decision reflects the reluctance with which it will have been taken. Only 1,000 locally based pilgrims were allowed to perform the ritual in 2020, compared with more than 2m in previous years, causing a significant loss of earnings at a time when the pandemic and associated oil price slump were already placing the public finances under severe strain. The fiscal position has improved in 2021, but another deficit (with a government balance of -2.6% in 2021) is expected.
Although the kingdom’s coronavirus vaccine rollout is progressing well, after a relatively slow start, (with nearly 50 doses now administered per 100 of population), cases have been rising steadily since late March. International flights resumed in June, but are subject to strict quarantine requirements for the unvaccinated, which would be near-impossible to enforce during a full haj. Making inoculation a condition of visiting (as it will be for those residents attending) would not only be logistically daunting—requiring technological co‑ordination probably beyond the capacities of many prospective worshippers’ home countries—but also severely limiting in itself, given low vaccination rates in those source markets. A resumption of travel freedoms, for leisure and religious tourism, remains a distant prospect in some parts of the Middle East.
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