After completing the first half of the semester, you should be able to relate what you have learned so far with macroeconomic data. So, read the following statements and explain using what you have learned such as productivity, production, components of GDP and GDP growth. Then link that to the attached tables:
What happened to GDP in general and GDP by economic activity in Table 1 or Table 4 (Table 4 is easier) during the pandemic? Which sector has been affected the most during the pandemic and why do you think this sector has been affected the most?
One of the most important goals of Vision 2030 is to shift production in the Kingdom of Saudi Arabia from relying mostly on oil to diversifying its production, do you think we are moving in the goal of diversifying production by looking at tables 15 and 16 (Table) It is easy to see Figure 16 because it shows growth) From 2018 to 2021. You can also see Tables 8 and 10 for the annual data.
Remember that what you have learned about national income (GDP) Y = C + I + G + NX is exactly the same components given in Table 17 or 18 and some other tables.
Also I should to respond to 5 of classmate discussions.
First one
Table No 4 ‘Wholesale & Retail Trade, Restaurants & hotels sector’
In my opinion the Wholesale & Retail Trade, Restaurants & hotels sector has been affected during the pandemic. Q1 was 6.8 and went in Q2 to -17.7 which is a major decline. For wholesale & retail trade with the sales of textiles, clothing and leather products being affected the greatest due to the closing down of the majority of retail stores, with the exception of essential stores for example supermarket and pharmacies. Restaurant & hotels also has been affected and that’s because restaurants closing or barely staying afloat on take-out business, and hotels adjusting to fewer guests. People also were quarantine and social distancing.
Table No 16 ‘None-oil sector Privet sector’
Yes, I think we are going into the target of diversifying production, we are towards the goal. In none-oil sector specifically the privet sector for the year 2018 to 2019 the numbers were increasing or in constant rate which is a good sign I also noticed that in 2020 the pandemic year, which mean ‘The economic biggest problem’ the privet sector decreased, the rate was significantly affected just in the first and second quarters then it got so much better..
Second one
- Gross domestic product is the most important economic influencer to measure the size, strength and health of economies, and it is the sum of goods and services produced by the economy during the year.
The Corona pandemic led to the application of strict restrictions in many countries, including the Kingdom of Saudi Arabia, which disrupted economic activities, internal and external travel, curfews, closed schools, factories and shops, and stopped services, and this has a negative impact on Saudi Arabia’s gross domestic product.
Among the sectors that have been positively affected under the Corona pandemic is the agricultural sector: in the first quarter of the year 2020, the gross domestic product increased to 17,443 compared to the last quarter of 2019 and this is due to the decrease in the import process, which reflected positively on the local food projects, as they were expanded and production increased It refers to the growth in demand for establishing new food projects, and one of the facts revealed by the Corona pandemic is the urgent need to achieve food security to face the risks of interruption in supply chains, and this increases the domestic gross product and enhances the trend towards exporting to global markets. Among the ways and solutions that benefit this sector is the transfer of water technology and the direction of people to local production.
The electricity sector is one of the sectors that have been negatively affected by the Corona pandemic. In the last quarter of 2019, the GDP was equal to 9440, and in the first quarter of the year 2020, the GDP decreased to 5,939, and this is due to taking measures to combat the pandemic, and these measures affected electricity consumption, in the Kingdom of Saudi Arabia. Saudi Arabia started the procedures on February 27, 2020, and Umrah, the Prophet’s Mosque, and economic activities such as cinemas, markets, malls, workplaces and flights were suspended. Environmental, climatic and high temperature increase the demand for electricity.
The retail and wholesale sector is also one of the sectors that have been negatively affected by the Corona pandemic, in the last quarter of 2019 the GDP was equal to 79,496 and in the first quarter of the year 2020 it decreased to 75,884 and in the second quarter it became 58,167 and this is a significant impact due to the closure of facilities and the imposition of precautions. The government supports small and medium-sized enterprises that are facing difficulty in providing liquidity due to the ban, and in the third and fourth quarters of 2020, the retail sector is increasing due to the lifting of the ban. One of the reasons that led to the decline in the gross domestic product is the tendency of people to shop online and order products from other countries through the Internet.
The mining sector is one of the non-oil sectors, and the Kingdom seeks, in its new vision, to adopt the mining sector as one of the pillars that can be relied upon to generate investment opportunities and reduce dependence on oil products. The inability to sell or collect or the ability to deliver raw materials with the closure of all factories and the prohibition of movement between cities.
B- The Kingdom of Saudi Arabia has reduced dependence on oil as a main source of income, and crude incomes have been reduced to financial revenues. One of the goals of Vision 2030 is to diversify sources of income so that oil is not the main source of the Kingdom, especially in light of the challenges represented by the drop in the price of a barrel of oil. Non-oil revenues have increased in recent years compared to previous years, and the Kingdom has implemented practical steps to strengthen the non-oil economy and diversify the economy through tourism and entertainment and through several projects such as NEOM. strong. From Table 15 in Excel, “In 2019, the GDP of the oil sector gradually decreases in each quarter and also in 2020 due to the Corona pandemic. In the non-oil sector, we notice an increase in 2018. Every quarter increases the GDP more than the previous quarter, and in 2019 also it increases The GDP of the non-oil sector, but in 2020, in the first, second, third and fourth quarters, the GDP was decreasing due to the precautions that were taken in the Corona pandemic, and the sources that were the cause of non-oil income were closed.
The last one
Often, GDP (Gross Domestic Product) is a summative measure of the market or monetary value for finished goods and services produced within the borders of a given country. It simply measures the total value added in the economic development calculated by Y = C + I + G + NX. Considering the economic development patterns in the annual growth rates in the GDP from the provided data, it can be noted that the period of the pandemic experienced a variation in the GDP in the first, second, third, and 4th quarter of 2020 and the 1st quarter of 2021. The 1st quarter had a lower GDP growth (-3.2), which further decreased to -23.8 in the 2nd quarter. It increased to -10.4 in quarter 3, and -9.4 in the final quarter making 2020 have an average GDP of -11.9. This implies that the growth was negative since there was a negative growth in the value added to the economy. There was ,however, a tremendous improvement recorded in the 1st quarter of 2021.
As one of the most effective strategies to meet the vision 2030, Saudi Arabia intends to diversify its economic sectors and shift from entirely depending on oil production to depending on other sources of economic production. Looking at table 16, it is evident that this target is being achieved. In quarter one of 2021, the non-oil products recorded a 4.9 GDP, which was higher than that obtained in the oil sector, which was -8.7. Since 2018, the non-oil sector has had a significant and gradual increase in its contribution to the GDP apart from quarter 2 of 2020, which had a significant negative deviation due to Covid-19. Achieving this target will help Saudi Arabia to attain its vision 2030.
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