| The coronavirus crisis will likely impact global economic growth and oil demand, but countries are putting in place robust measures to protect their citizens.
To respond to the economic fallout, the Saudi Arabian Monetary Authority cut its key interest rates by 50 basis points (bps). The central bank slashed its repo rate – used to lend money to banks – by 50 bps to 1.75% and its reverse repo rate – at which commercial banks deposit money with the central bank – by 50 bps to 1.25%.
The Saudi government has also unveiled a SAR 120 billion financial stimulus package to help companies weather the downturn, and has taken a number of measures, including travel restriction, to ensure the well-being of its people.
The Organisation for Economic Co-operation and Development (OECD) forecasts global economic growth to rise 2.4% in 2020, compared to an already weak 2.9% in 2019, before rising to a modest 3.3% in 2021. The OECD has also revised growth prospects for China below 5% this year, following 6.1% in 2019.
In an effort to boost economic activity the US, the Federal Reserve cut interest rates by 50 basis points in early March. Major global multilateral institutions are moving quickly to address the economic fallout. The International Monetary Fund said it is making available about USD 50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging market countries that could potentially seek support.
As the president of G20, Saudi Arabia has also taken a leadership role in responding to the COVID-19 pandemic.
The Saudi G20 presidency said it has taken necessary precautionary measures for all meetings through to the end of March, whilst ensuring important discussions continue to take place and efforts are focused on the global response to COVID-19.
“The G20 is working closely with the World Health Organization (WHO) and the Saudi Ministry of Health given the rapidly changing circumstances around COVID-19, including elevated travel restrictions, and will continue to evaluate the status of meetings,” according to a G20 statement.
The latest global health crisis will likely impact the global economy, as well as regional and domestic economies, as businesses slow down and authorities take precautionary measures to respond to the crisis. But Saudi Arabia and other countries remain on a strong fiscal footing, and will take all necessary measures to protect their citizen’s health and financial well-being. |
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