Impact of COVID-19 on Saudi Economy and Consumer Behavior
The entire world has been negotiating a challenging phase right now. The COVID-19 pandemic has hit the global economy hard, and, like any other country, the Saudi Arabian economy has also been affected in a big way. But the pandemic has developed a culture of conscious consumption in Saudi society. This will benefit the national economy in the long term.
The economy worldwide is showing signs of a slowdown, which has already started showing its impact on the way people buy and consume things. There has been a paradigm shift in consumer behavior. Most of the people are now shopping online. Businesses related to health and nutrition have been reporting the highest sales in the market. The Saudi markets are expected to see a sharp fall in prices as people become more health-conscious and purchase with a different frame of mind, careful not to spend unnecessarily. They are, however, willing to spend on items related to health and hygiene. There has been a distinct reduction in individual spending. People want to save more. They are not going to indulge in impulse buying.
As per a survey by Ernst & Young (EY), 69 percent of consumers in the Middle East and North Africa (MENA) claim that COVID-19 has changed their way of life for the long term. The survey found that 68 percent of MENA consumers have changed their consumption values, and only 9 percent of consumers are thinking of returning to regular spending.
The adverse impacts of the COVID-19 pandemic have taught people how to spend and how to save. Many people have started to follow spending strategies to prevent financial losses.
The EY Future Consumer Index, which questioned 1,018 consumers from Saudi Arabia and the UAE, found that 84 percent of consumers had modified the goods they bought, with a greater emphasis on value for money and a greater commitment to purchase products manufactured locally. According to the poll, sixty-eight percent said their beliefs had changed, and they are now looking at life differently.
Several significant decisions have already been taken by the Saudi Government to tackle the economic slowdown. These efforts started when the country was welcoming the G20 to a global virtual conference. The conference succeeded in reaching an agreement under which the supply of oil on the international markets was to be limited so that oil would not be priced more than its real worth.
The government has also taken measures to guard against falling into a recession of the national economy. By paying about 60 percent of the wages of its workers, it supported the private sector. It approved a special budget to support the private sector along with funding for anti-coronavirus projects. It has also warned the private sector of the repercussions of cutting its employees’ services.
These steps will surely help Saudi Arabia tide over this challenging time brought about by the COVID-19 pandemic.