Saudi hands out billions, Makkah sees hajj boom

RIYADH-Saudi Arabia announced Monday it was disbursing billions of dollars directly to citizens to ease the effects of inflation amid growing online expressions of frustration over rising prices. 

“A generous royal order was issued approving the allocation of financial support in the amount of 20 billion riyals (around $5.3 billion) to face the repercussions of rising prices globally,” the official Saudi Press Agency reported, attributing the decision to King Salman. 

Roughly half that amount would come via direct cash transfers to social security beneficiaries. 
Pilgrims shop in a market, Makkah in this holy city on July 4, 2022 .(Photo by AFP). 

Earlier on Monday, Crown Prince Mohammed bin Salman “stressed the need to take into account the neediest citizens in the face of international developments that resulted in rising costs of some basic needs”, a separate SPA report said. Chairing a meeting of the kingdom’s economic affairs council, Prince Mohammed reportedly made the point that government offices must respond to global supply chain issues and rising prices to protect consumers’ interests. 

Meanwhile, “Business is back”, exclaimed Abdullah Mekhlafi at the shop where he sells prayer mats in Islam’s holiest city, which is preparing for the biggest influx of hajj pilgrims since the coronavirus pandemic began. Two years of drastic restrictions on the number of pilgrims who could perform the hajj emptied shops and hotels across the Saudi Arabian city of Makkah. But business owners are hoping for a quick recovery as hundreds of thousands of worshippers flock to the region this week. 

“We had few customers (during the last two hajj seasons), but today business is back, thanks to God. It’s the same as before, and even better,” 30-year-old Mekhlafi told AFP. One million people, including 850,000 from abroad, will be allowed at this year’s hajj, one of five pillars of Islam which all able-bodied Muslims with the means are required to perform at least once in their lives. 

In 2019, about 2.5 million people took part in the rituals, which include circling the Kaaba at the Grand Mosque in Makkah, gathering at Mount Arafat and “stoning the devil” in Mina. The following year, after the pandemic took hold, foreigners were barred and the total number of worshippers was capped at 10,000 to stop the hajj from turning into a global super-spreader. That figure rose to 60,000 fully vaccinated Saudi citizens and residents in 2021. 

The hajj, which costs at least $5,000 per person, and umrah pilgrimages that occur at other times of year are usually a significant revenue earner for Saudi Arabia, especially its tourism sector. In normal times, they generate about $12 billion annually, keeping the economy humming in Makkah. The city has seen a construction boom in recent years that has brought new shopping malls, apartment buildings and luxury hotels – some offering spectacular views of the sacred Kaaba, the large black cubic structure at the center of the Grand Mosque towards which all Muslims pray. 

But these projects were starved for clients during the pandemic, meaning their owners were cheered by scenes already unfolding in Makkah on Monday, two days before the hajj officially begins. White-robed worshippers were flocking to souvenir and barbershops across the city of two million. And the main shopping center near the Grand Mosque, where many hotels are located, was buzzing with pilgrims again, a far cry from a year ago when the area looked nearly abandoned. 

Amin, a perfume shop owner, was bullish about his prospects, telling AFP his losses could be recovered this year. “There is a huge difference between this year and past ones. This year we can see a lot of pilgrims who are bringing back the glory to the Grand Mosque,” he said. “The losses were big, but now things are better.” 

The changes in Makkah track the recent economic fortunes of Saudi Arabia. During the pandemic, the kingdom faced a sharp downturn in oil prices due to a collapse in global demand, which triggered austerity measures including the tripling of a value added tax and cuts to civil servants’ allowances. Particularly after Russia’s invasion of Ukraine in February, things seem to have changed. 

“The impact of the losses during the last two years was significant, but we are starting to see a recovery on the business level, and this year’s (hajj) is good news,” said Salem Ali Shahran, operations manager at the biggest hotel chain in Makkah. “The current numbers have reached 40 percent of their 2019 levels. We hope for bigger numbers in the coming years.” 

Saudi Arabia’s GDP is expected to grow by 7.6 percent in 2022, the International Monetary Fund said in April. The world’s biggest oil exporter is trying to diversify its economy, a main pillar of the Vision 2030 reform agenda pushed by Crown Prince Mohammed. Tourism is a crucial component of that plan, making a booming hajj all the more important. 

The current goal is for Saudi Arabia to triple foreign tourism this year as pandemic restrictions ease, Ahmed Al-Khateeb, the tourism minister, told AFP in an interview last month. Of the 100 million foreign and domestic tourists targeted for 2030, 30 million are expected to be making religious trips, largely to Makkah and Madinah, Islam’s two holiest sites. 

Saudi Arabia, the world’s top oil exporter, has not been hit as hard by inflation as other countries in the region. The most recent consumer price index for Saudi Arabia showed an annual increase of 2.2 percent in May, with prices up 4.2 percent for food and beverages and four percent for transport. Nevertheless, the kingdom’s tightly controlled social media landscape has featured more frequent griping about rising prices in recent weeks, including Twitter hashtags calling for a boycott of eggs and a well-known dairy company. 

Saudi Arabia’s economy has generally performed well this year, especially since Russia’s invasion of Ukraine sent energy prices soaring. In early May, the Gulf monarchy reported its fastest economic growth rate in a decade, as a surging oil sector fueled a 9.6 percent rise in the first quarter over the same period of 2021. Saudi Arabia’s announcement came as the United Arab Emirates similarly said it was doubling the budget for its social security program to 28 billion dirhams (about $7.6 billion) after a rise in fuel prices. (AFP)

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