2020 proved to be anything but business as usual. It was a year that saw unprecedented challenges as GCC states adapted to the fallout of the global pandemic. Within the Kingdom, the results of decisive measures taken early on in the crisis are starting to show. Green shoots of recovery are beginning to emerge, with confidence in Saudi Arabian businesses rising to levels not seen since January 2020.
With improvements in output and orders, businesses can take some comfort in the turnaround. After a difficult year brought about by the spread of COVID-19, employment figures have also made a welcome return to growth, reassuring policy-makers that the economy is heading in the right direction.
Bolstered by output and new business growth, Saudi Arabia’s PMI Purchasing Managers’ Index saw a consistent monthly rise throughout the last quarter of 2020. With anything in the index over 50 points signifying a positive trend, the index has registered above the 50.0 no-change mark for three months in a row, highlighting a sustained economic recovery and a strong end to the year for the non-oil private sector.
Continued public spending coupled with an improving health situation could nudge growth higher, with index points expected to climb in 2021.
Getting back to work.
Encouraged by the easing of lockdown measures, in addition to the arrival of the vaccine, some businesses have spoken of concerted efforts to raise inventories and increase private sector investment in anticipation of a quickened uptick in 2021.
Government-led stimulus and relief efforts have seen encouraging results, notably with a rise in employment and acute demand growth. Recent Labour Reform initiatives strive to further develop local job markets and create a pool of highly skilled talent.
At the virtual G20 Summit, King Salman bin Abdulaziz Al Saud sought to stress the importance of job protection and support for labor markets throughout the COVID-19 crisis and beyond. Hosted from Riyadh, participating leaders and invited guests were presented with the theme of Realizing Opportunities of the 21st Century for All.
Building on Vision 2030’s blueprint to launch new growth sectors, Saudi Arabia is expected to see increased global investment across a significantly broader economic base. The next generation of Saudi youth will be offered the opportunities and equipped with the skills to help them realize their individual potential.
Businesses around the world will be hoping that 2021 will see a year of beneficial transformation and rapid recovery. Engineering a significant rebound will require much more than a vaccine. However, the bold steps taken by policymakers within the Kingdom are sure to set the Saudi economy on the right path and in good shape for achieving its 2030 Vision.