Saudi Arabia outperforms most G20 economies in Q2 despite COVID-19, low oil prices

Most G20 countries witnessed steep declines in their economic growth during the first half of 2020, hurt by COVID-19. 

Contrarily, Saudi Arabia, in addition to the COVID-19 pandemic impact, was hit by lower oil prices during the second quarter of 2020. 

However, the Saudi economic growth slowed by 7% in Q2 2020 compared with the same period last year - the lowest level among other G20 countries.  

Saudi oil exports retreated by around 61.8% year-on-year (YoY) to reach SAR 74.8 billion in Q2 2020. 

The Kingdom ranked fifth among the G20 countries, while China came first, as it was the only country that reported an increase in its gross domestic product (GDP) of 3.2%, the data of the Organization for Economic Cooperation and Development (OECD) showed. 

G20 economies were impacted significantly by the precautionary measures taken to overcome COVID-19. 

The following table illustrates the change in the GDP of G20 economies in Q2 2020:

* The data of Argentina and Russia have not been released

** According to the data of the General Authority for Statistics

The Saudi Ministry of Finance expected the actual GDP to fall by 3.8% in 2020, and the economic performance to improve during the second half of 2020, based on local demand key indicators such as private consumption, production and activity performance. 

The measures taken by the government to overcome COVID-19 and the continued decline in cases contributed to this improvement, the ministry stated. 

The contraction in Saudi Arabia’s GDP is likely to be better than the majority of the remaining G20 members, according to the ministry and International Monetary Fund’s (IMF) estimates. 

*According to the Ministry of Finance’s estimates

Fitch affirmed its credit rating at ‘A’ for the Kingdom, with stable outlook, despite COVID-19 and low oil prices. Both Moody’s and S&P also affirmed their ‘A1’ and ‘A-/A-2’ ratings for the Kingdom, respectively, with stable outlook.

Fitch attributed its rating for the Kingdom to the financial strength supported by the exceptionally high international reserves.

Saudi Arabia ranked fifth globally with foreign cash reserves amounting to $453 billion, according to the latest data.

Despite the COVID-19 repercussions, the Kingdom’s, debt to GDP ratio is still very low compared with the G20 countries as the Ministry of Finance expected the ratio to reach 34.4% in the end of this year.

The global public debt to GDP is expected to exceed 100% this year.   

The following table indicates the IMF’s forecasts for the G20’s debt to GDP ratio this year:

*The report does not include Argentina

** According to the Ministry of Finance’s estimates

For unemployment, although the COVIID-19 pandemic led to a significant increase in the world’s unemployment rate in Q2 2020, the Kingdom took some measures to ease the negative effects of the crisis, as King Salman issued a royal decree, directing the government to cover 60% of the employees’ salaries in the private sector through “Saned” program to maintain jobs. 

In addition, the Ministry of Human Resources and Social Development has regulated the contractual relationship between workers and employers, to support the government’s efforts to control the COVID-19 repercussions. 

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