After finishing the first half of the semester, you should be able relate what you have learned so far into the macroeconomic data. So, read the following statements and explain that using what you have learned such as productivity & production and GDP growth & GDP components. Then, relate that to the attached tables:
- What happened to the GDP in general and the GDP by economic activity on table 1 or table 4 (table 4 is easier) during the pandemic? Which sector has been affected more during the pandemic and why would you think this sector has been affected more?
- One of the most important targets for the Vision 2030 is to switch the production in Saudi Arabia from mostly depending on Oil to diversify its production, would you think we are going into the target of diversifying production through looking at the tables 15 & 16 (table 16 is easier to see because it shows the growth) from 2018 to 2021. You can also look at tables 8 and 10 for annual data.
Remember that what you have learned about the national income (GDP) Y = C + I + G + NX is exactly the same components on table 17 or 18 and some other tables.
Excell File (Attached)
Replies to posted discussions (5 replies):
First post :
The following is what happened to GDP in general:
According to table 4, the Saudi economy slowed in the year 2019 just before the beginning of the COVID-19 pandemic, with GDP growth of 0.8 percent. However, in the first quarter of 2020, when the epidemic began, we noted a drop in GDP growth. The global GDP growth rate will have declined by 11.7 percent by the end of 2020.
In terms of GDP growth by economic activity, it went like this: Despite the fact that the overall GDP has declined significantly and many sectors have deteriorated in 2020, a few sectors, such as agriculture, forestry, fishing, construction, and imputed bank services charges, have flourished a little during the pandemic.. However, this improvement was insufficient to ensure that the economy ran smoothly the same year.
Which industry has been the most affected by the pandemic, and why?
According to Table 4, the crude petroleum and natural gas sector was the worst hit by the pandemic, with a 36.4 percent drop by the end of 2020. Because most countries had implemented various sorts of lockdowns and curfews, this happened.Many businesses and modes of transportation were able to reduce their reliance on oil and gas as a result of this. As a result, demand for oil and other petroleum products has decreased significantly over the world.
When it comes to Vision 2030 and the diversification strategy,
Starting in the third quarter of 2020, we can see a growing growth rate in the non-oil sector, which increased by 5.7 percent, according to table 16. The private sector is also increasing rapidly, with a 7.2 percent growth. The oil sector, on the other hand, was regressing, falling by 2.9 percent until it reached –8.9% in the first quarter of 2021.This implies that the Saudi government is making significant efforts to diversify the economy away from reliance on the oil industry as the primary source of revenue.
Second Post:
Looking to the National GDP of the kingdom, we can note that it has witnessed a great drop during the COVID 19 pandemic. Regarding the sector that was effected more from this pandemic, it can be said that the Oil sector is the most effected sector, that is because the great drop in the oil prices in the world, which is considered the main source on the national income in the kingdom, which lead to decrease the total revenues that are generated from this sector and then affect on the overall GDP of the kingdom.
Through analyzing table 15-16, we can already say that the kingdom is going ahead and show great performance in its road to have a diversified economy that is based on stop depending on Oil as the main source of the economy, due to that the kingdom has lighten the pressure on oil sector and has developed new branches like private sector and use new techniques to maximize the role of the this sector to create the ideal collaboration between the it and the governmental sector to represent the main support for the national income.
References:
Hamilton, J. D., & Kim, D. H. (2000). A re-examination of the predictability of economic activity using the yield spread.
Third Post:
- As a result of the epidemic: the economy shrank by 11.7%. The pandemic had a negative impact on GDP by economic activity in 2020, with nearly every economic activity being negatively affected. To be more precise, the mining and quarrying industries were the most severely impacted by the epidemic. The average change in total GDP was 11.7 %, according to Table 4. In addition, Table 4 reveals that quarrying and mining will lose the most money in 2020, with a loss of 35.7 percent. In the year 2020, almost all economic activity shrank (relying on data in table 4).
- Definitely. With the exception of Q1 and Q2 owing to the pandemic, the non-oil industry was able to sustain its expansion. However, as compared to the oil sector and GDP excluding imports, the sector was able to sustain a more steady growth rate Likewise, from Q1 of 2019 to Q1 of 2021, the oil industry, on which the country is largely reliant, has been steadily shrinking (only grew during Q4 of 2020). This indicates that the country is gradually weaning itself off of its reliance on oil. , and is transitioning to the non-oil sector, as seen by the non-oil industry’s steady growth from 2018 to 2021. Saudi Arabia can meet its target by 2030 if current trends continue. Table 16 demonstrates that the oil industry has been declining steadily since Q1 of 2019, indicating that Saudi Arabia is gradually weaning itself off the sector. Table 16 demonstrates that, with the exception of two quarters, growth in the non-oil sector remains steady. When opposed to the oil industry, the non-oil sector has a more consistent growth rate, which is in line with Saudi Arabia’s objective of diversifying its production by 2030.
fourth Post:
- Absolutely, it is. The non-oil sector appears to have been affected by the pandemic, with the first and second quarters standing out. However, when compared to the oil industry and the GDB without imports, this sector may be able to maintain more consistent growth.
- Additionally, the country’s heavily depended oil industry progressively deteriorated from the first quarter of 2019 to the first quarter of 2021. (it only increased in the fourth quarter of 2020). As seen by the state’s stability, this suggests that the state is gradually shifting away from its reliance on the oil industry and toward non-oil sectors. From 2018 to 2021, non-oil industry growth. If present trends continue, Saudi Arabia will be able to accomplish its goals by 2030. Table 16 shows that Saudi Arabia’s oil sector has been decreasing since the first quarter of 2019, suggesting that the country is progressively weaning itself off of its dependency on it. From the other hand, Table 16 shows that, with the exception of two quarters, the non-oil sector’s growth is stable. The non-oil sector’s growth is more consistent than the oil industry’s, which is in keeping with Saudi Arabia’s goal of diversifying production by 2030
- fifth Post :
- Affected by the epidemic, GDP shrank by 11.7%. The GDP is also affected by economic activities, as almost all economic activities in 2020 will be affected by the epidemic, with mining and quarrying being among the economic activities most affected by the epidemic. The mining and quarrying industry was affected by the epidemic by 35.7% in 2020 Table 4 shows that the average change in GDP is 11.7%. Table 4 also shows that the mining and quarrying business will suffer the largest loss in 2020, at 35.7%. Economic activity will also contract almost completely in 2020 (based on the data in Table 4).Exactly: it is. The data indicates that the non-oil sector has been affected by the epidemic, with the exception of the first and second quarters. However, compared to the oil sector and GDP excluding imports, this sector is still able to maintain more stable growth. In addition, the country’s highly dependent oil sector contracted steadily from the first quarter of 2019 to the first quarter of 2021 (it only increased in the fourth quarter of 2020). This means that the state is slowly getting rid of its dependence on the oil sector and gradually switching to the non-oil sector, and stability is evidence. Growth of the non-oil sector from 2018 to 2021. If this trend continues, Saudi Arabia can achieve its targets by 2030. Table 16 shows that the oil sector has been shrinking since the first quarter or 2019, which shows that Saudi Arabia is slowly getting rid of its dependence on the sector. On the other hand, Table 16 shows the stability of the growth of the non-oil sector with the exception of two quarters. If we compare it with the oil sector, we can conclude that compared to the oil sector, the growth of the non-oil sector is more stable, which is consistent with Saudi Arabia’s goal of diversifying production by 2030
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