The services sector contributed 60.6 percent to the Saudi GDP at current prices for the second quarter of 2020 (the Saudi economy), with an output of about 342.1 billion riyals, while the gross domestic product of all economic sectors and activities in the Kingdom amounted to about 564.2 billion riyals.
According to the monitoring unit of the reports in Al-Eqtisadiah newspaper, which was based on official data, the contribution of the services sector to the GDP during the second quarter of 2020 is the highest since 2010, according to available data.
The value of GDP for services activity decreased 7 percent during the second quarter of 2020, with a difference of 27.1 billion riyals from the levels of 369.2 riyals in the second quarter of 2019, as businesses were affected by the global pandemic Covid-19.
This comes despite the contraction of the Saudi gross domestic product at current prices during the second quarter of 2020 by 24 percent, which reflects a promising future for the sector locally.
The GDP for services activity recorded the first negative growth since the first quarter of 2017 when it declined by about 3.3 percent at the time.
The services sector is expected to record rapid growth during the coming years, in light of the huge tourism and entertainment projects announced as part of the Kingdom’s Vision 2030, including the Qiddiya project, the Red Sea project, and the Neom project, as well as the development of Al-Ula, which will contribute billions of riyals to the gross domestic product.
The services sector is one of the most labor-intensive sectors, and thus focusing on and developing it may contribute significantly to solving the problem of unemployment among Saudi citizens, which reached 15.4 percent by the end of the second quarter of this year.
The sector is also a basic pillar of economic development, in addition to the growth of the other two sectors that make up the domestic product, namely “industrial” and “agricultural”.
Sector component activities
The GDP of the services sector includes five main activities: wholesale and retail trade, restaurants and hotels, transportation, storage, information and communication, money services, insurance, real estate, business services, collective, social and personal services, and fifth, government services.
The activities constituting the services sector, in terms of the contribution to the sector’s GDP at current prices in the second quarter of 2020, are topped by the “government services” activity, with a 40.5 percent contribution, with a value of about 138.4 billion riyals.
Government services are related to all government departments, central and local administration units, defense, security and justice agencies, units concerned with planning economic development, planning social welfare, education, health, culture, and social services, which are provided free of charge or at a nominal price, and social security agencies.
As for the second contributor, it is “money services, insurance, real estate, and business services”, 27.2 percent, with a value of 92.99 billion riyals.
And the activity of “money services, insurance, real estate, and business services” means two main items: the first includes housing ownership and estimating the rent of residential buildings, whether they are paid (leased to others) or accounted for (occupied by their owners), and the second item represents money services and includes financial services and insurance activities. Insurance, reinsurance, and pension financing activities, while business services include activities auxiliary to money services activities and insurance services.
As for the third contributor, it is the activity of “wholesale and retail trade, restaurants and hotels” with a contribution of 17 percent and a value of 58.17 billion riyals, which is the sector most affected during the period, especially from the economic closure, which took place during the period, as it decreased by about 18 percent, compared Similar period last year.
The “wholesale and retail trade, restaurants, and hotels” is divided into two parts. The first is wholesale and retail trade, and it refers to the trade of purchased goods for the purpose of selling them in the same condition, while hotels and restaurants include providing meals and accommodation.
The fourth contributor is the “transport, storage and communication” activity, with a contribution of 10.9 percent and a value of 37.14 billion riyals.
The activities of “transport, storage, and communication” include land transport, water transport, air transport, pipelines, storage, telegraphic, post, and telephone services, and include publishing activities, film production, television programs, sound recordings, radio and information services.
The activity of “collective, social, and personal services” is the fifth component of the services sector, with a contribution of 2.7 percent and a value of 15.35 billion riyals.
It is noteworthy that “collective, social and personal services” means the home services provided to families among themselves, education activities, health activities, social work activities, welfare activities, sports, leisure, entertainment, culture and arts activities, shelter activities, libraries and museums activities, and games activities.
Source: Asharqia Chamber