There were hardly any Easter celebrations in Europe two weeks ago. Now the world-famous mosques in the holy places of Mecca and Medina in Saudi Arabia remain closed, as do most places of worship for Sunnis and Shiites.
The world-famous Kaaba in Mecca, a central place of pilgrimage for Islam, does not open either. Dense crowds of people pilgrimage around the black cube every day, but now the space is empty – this has never happened before during Ramadan.
But especially in the Arab world, the economic consequences of the corona-related Ramadan austerity program are far more devastating than the Easter holidays in Christian countries. At Iftar, the breaking of fasting every evening, rich families on the Gulf often invite you to a noble meal in luxury hotels, many also fly to relatives and friends in their residences on the other side of the globe. Pilgrimages to the holiest mosques, the hajj, are prohibited. But these rituals are now canceled because of the virus.
Abdul Latif al-Sheikh, Saudi Arabia’s Minister for Religious Affairs, announced that all Muslims in his country can only pray at home during Ramadan. Any gatherings or prayers together in the country’s mosques are prohibited during the month of Lent. “Our hearts are crying,” said Ali Mulla, the muezzin – the prayer caller – of the Great Mosque of Mecca because of the forced closure.
Big sales during Ramadan
Meanwhile, the Dubai government announced on Thursday that the temple of consumerism – the famous, world’s largest shopping malls – is now on stand-by for reopening. The centers are therefore preparing to open – under strict conditions.
During Ramadan, when people fast during the day and actually pray several times in mosques and eat and celebrate all the more after sunset, sales in the Muslim world are by far the highest sales in the Muslim world for retail.
Already in the previous years, a lot of retail sales had been redirected to online retail, in the two previous years alone, e-commerce had doubled in the Gulf States during Ramadan.
Since the outbreak of the corona crisis, life retail chains such as the French, which are strongly represented in the Gulf, have also been involved CarrefourGroup, online sales have increased dramatically. Driving services like Over or Careem, which comes from Dubai and has been taken over by the US industry leader, is now increasingly transporting food and medicine purchases to private customers instead of passengers.
In the shadow of the crisis, a consortium led by Sheikh Tahnoon Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family, the main emirate of the United Arab Emirates (UAE), bought around a fifth of the Gulf retail chain Lulu for around one billion on Thursday accepted. With Lulu, the Indian entrepreneur Yusuff Ali became a billionaire.
Saudi Arabia’s sovereign wealth fund PIF, meanwhile, started a shopping tour with European and American groups shortly before the fasting month: Riyadh’s billion-dollar PIF has large packages with the cruise company Carnival and with European oil companies like Equinor, Total, Eni and Shell and bought the majority at the British football club Newcastle United.
Whether the billion-dollar carousel consumption in stationary shops is picking up again and how strongly sales are slumping due to canceled Iftar fasting festivals and travel bans mainly depends on the further spread of the corona virus: So far, the number of infected and dead people in the Gulf has continued to increase, but is With 12,272 cases so far in Saudi Arabia alone, it is even behind those in small Israel and above all significantly behind the vast majority of European countries.
Economically, however, the Gulf States suffer extremely. Emirates, the world’s largest provider of intercontinental flights from the UAE Emirate of Dubai, has buried its hope of significantly expanding flight operations again shortly.
So far only a few homecoming flights have been made. According to the magazine “Arabian Business”, scheduled flights are to be started up slowly on July 1 at the earliest. Etihad, the Abu Dhabi airline and its distressed holdings such as Alitalia and Virgin Australia, is suffering even more severely. The low-cost airlines flydubai and Air Arabia from the Emirate of Schrjah also had to largely discontinue flight operations.
Aviation and trade are the most important sectors for Dubai. Abu Dhabi, Iran and Saudi Arabia are mainly dependent on the oil business. And the violent turmoil on the oil markets is putting considerable strain on the largest economies in the Gulf: Saudi Arabia, the world’s largest oil exporter, is likely to more than double its budget deficit to 15 percent of GDP due to the demand shock caused by the corona crisis. Mohamed Abu Basha, head of macroeconomic forecasts at Cairo Investment Bank EFG Hermes, believes that.
The unexpectedly violent oil price shock “changed everything,” says Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The recent upturn was largely due to the fact that the oil price was over $ 50-60 to support economic activity, and that has only just been decimated.”
Actually, the vast majority of economists and entrepreneurs in the Gulf had an economic recovery in 2020 after years of weak growth. Now forecasts predict an at least three percent recession in Saudi Arabia.
Saudi Arabia has to incur more debt
But Riyadh’s finance minister Mohamed Al-Jadaan officially sees it as loosely: “We have been through worse things,” says Al-Jadaan, referring to previous oil price crashes and a budget deficit of 17 percent in 2016. His country, which is currently trying to support companies with billions of euros in bailout funds, be financially strong enough to master the crisis.
Saudi Arabia could expand its debts significantly this year. So far, the country only has a national debt of around one fifth of GDP – Europe’s Maastricht criteria, which are often broken, allow EU countries 60 percent.
Saudi Arabia could record $ 58 billion in debt in 2020. Almost half have already been raised via bonds on domestic and international capital markets. The UAE has also recently placed multi-oversubscribed billion-dollar bonds.
It is an open question whether at least the sugar festival, the traditionally generous end of Ramadan, can be celebrated publicly and economically. Only prisoners are lucky: Dubai Emir, Sheikh Mohammed, released 874 prisoners on the occasion of the beginning of Ramadan.
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