Riyadh – Mubasher: Beltone Financial attributed the increase in the Saudi unemployment rate to the slacking economic activity, noting that it is a temporary effect of the coronavirus crisis on the labour market.
The firm maintained its estimates of an 11.8% unemployment rate by year-end, as the kingdom extended some stimulus packages to private businesses that were hit-hard by COVID-19, Beltone said in a report on Sunday.
In the second quarter (Q2) of 2020, the total unemployment rate, for people aged 15 or older, increased by 3.4% yearly to reach 9%. Expatriates unemployment recorded 3.1% in Q2-20, compared with 0.5% in Q1-20. This has led to the sharp decline that the private sector had witnessed, Belton explained.
The report also expects economic relief efforts and spending across all sectors to continue, despite the anticipated improvement in economic performance during the second half (H2) of the year. It further expects private spending to slightly improve in H2, particularly with the gradual resumption of Umrah activities
Moreover, the kingdom’s real gross domestic product (GDP) is predicted to contract by 3.9% in 2020, whilst the oil and non-oil GDPs are likely to drop by 5.1% and 2.8%, respectively, the report said.
In the April-June period of the year, the Gulf state’s GDP at constant prices fell by 7% to stand at SAR 597.84 billion. This shrinkage resulted from the 8.2% drop in the non-oil sector’s growth, followed by a 5.3% slump in the GDP of the oil sector.
In addition, private and capital spending witnessed a yearly slump of 17% and 25%, respectively, in Q2-20, beating estimates of just 5% and 15%, in that order.
At the sector level, hotels, wholesale, retail, and entertainment sectors were most hit during the pandemic, falling by 18% on an annual basis as predicted. This retreat was due to lockdown measures and travel restrictions.
Building activities slid by 4.7% yearly, as expected, given the low oil prices and high customs fees on iron imports at 10%-20%, compared with 5%-10% in June, the report concluded.
