COVID19 crisis: Businesses in Saudi sound confident as economy reopens
The ongoing COVID19 crisis in Saudi Arabia has made businesses, investors, and policymakers to reassess the continuity model. The disruption caused by the pandemic has allowed business leaders to make the companies robust, with improvised mitigation plans.
A big challenge for the government is to ensure and encourage investors to stay invested in the country.Today we look at what the investors in Saudi Arabia have to say about the business environment as the country lifts its lockdown gradually from this week.
Saudi Arabia had imposed a months-long lockdown to restrict the spread of coronavirus. Starting this week, the government will allow people, both in private and public sectors, to resume offices, open mosques, and travel within the country.
The Ministry of Investment of Saudi Arabia surveyed through its MISA COVID -19 Response Centre (MCRC), to analyze the mood of the businesses.The study shows most respondents were able to continue their businesses during the lockdown period. About 14% of respondents state that they could not continue with their usual operations and needed intervention from the government.
Almost half of the investors (49%) felt paying monthly remuneration to employees challenging, and about 48% of them were struggling to keep up with other expenses. About 46% of the investors participating in the study were worried about revenue generation.
However, companies appreciate that the steps taken by the government, banks, and financial institutions by granting moratorium on repayment of loans were helpful. Government stimulus offered to restructure, defer, or to change the granting criteria boosted the confidence among businesses.
What can sound encouraging for the economy is that about 94% of correspondents have no issues with payment of loans and do not have outstanding dues to settle.
The country had to bear the double shock of business disruption from lockdown and falling oil prices. However, economists believe that the Gulf country is better equipped financially to survive the crisis. Banking major JP Morgan forecasts that the Saudi economy is likely to shrink by 3% in the coming months. To mitigate the crisis, the government announced several fiscal and monetary stimulus plans, which included a $32 billion package to the private sector. Apart from tax waivers, payment of employees’ salaries, more than $ 13 billion was injected into the economy to ensure liquidity in banks.
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