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Pilgrim spending down 31 percent

Spending by domestic pilgrims dropped 58 percent to SR2.9 billion compared to SR6.9 billion last year

By Al-Eqtisadiah / 22 Oct 2013

Spending by pilgrims fell 31 percent to SR18 billion this year compared to SR26 billion last year, according to a recently published study.

The study by Abid Al-Abdalli, professor of economics at Umm Al-Qura University, for Al-Eqtisadiah newspaper, said the drop in spending was a result of the reduced pilgrim quota introduced by the Saudi government because of the expansion work at the Grand Mosque.

The number of foreign pilgrims dropped 21 percent with their spending contracting to SR15.2 billion compared to SR19.3 billion last year, or a decrease of 21.2 percent, the study stated.

Similarly, spending by domestic pilgrims dropped 58 percent to SR2.9 billion compared to SR6.9 billion last year, it said.

The number of domestic pilgrims fell by higher rates than expected by the Haj authorities, which led to the decline in the overall number of pilgrims. However, the effect of pilgrims without permits, especially those performing Haj from inside the city of Makkah, cannot by easily verified statistically, the study said.

Based on field surveys, 20.5 percent of Makkah families perform Haj every year, or 315,000 of the total population. However, other studies linked to the Institute of Haj and Umrah Research puts the figure at 500,000 pilgrims, according to the study.

Despite the importance of the number of Makkah pilgrims, this does not have a major economic impact compared to the spending of other pilgrims because they live in the city and use their own transport, the study said.

The spending of pilgrims depends on a variety of factors including the number of domestic and foreign pilgrims, spending motivations and the financial condition of each person. This is reflected in the income generated by Haj service sectors such as housing, transportation and stores, the study said.

The study said pilgrims spent the most on housing (40.5 percent), followed by gifts (14.6 percent), food (10.7 percent), electrical appliances (8.2 percent), clothes (7.8 percent), and on other items (18.2 percent).

The Haj season has a direct and indirect impact on the macro and micro economy of the Kingdom whether at the level of foreign currency reserves or balance of payments, the study said.

Assuming pilgrims spent on average SR25 billion a year and with the country's Gross Domestic Product (GDP) at SR1.8 trillion, their spending would account for 1.3 percent of GDP, according to the study.

 

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