Consumers in Saudi Arabia are turning to online channels for shopping following restrictions on trade and movement in the country because of the coronavirus outbreak. As the number of COVID-19 infections continues to increase globally the kingdom has managed to keep the number of cases low at around 1563 and only 10 deaths since the first case was reported on March 2nd.
The e-commerce sector growing as COVID-19 bites
The country imposed a 21-day curfew prohibiting the movement of people between 7.00 pm and 6.00 am. Other measures have also followed to combat the spread of the virus with the capital Riyadh and holy cities of Medina and Makkah put on lockdown.
With these restrictions, the e-commerce sector has witnessed a boost with people turning to online delivery. For instance, local e-commerce retailer BinDawood Holding reported that its average sales had surged 200% since the escalation of the coronavirus. The company’s stores are open and it has been hiring more drivers and packers as online deliveries demand surges.
Coronavirus pandemic has led to a slump in demand for oil
However, the coronavirus pandemic has negatively affected the oil sector because it has led to a drop in demand for oil globally. This, as a result, has contributed to a drop in the price of crude oil from $69 per barrel at the beginning of the year to around $26.82 per barrel at the end of March.
Since Saudi Arabi depends on oil which accounts for 63% of its national revenue the fall in oil prices is likely to affect government budgets. Investment bank Riyad Capital’s chief investment officer Hans-Peter Huber said that the impact of then coronavirus and the recent dip in oil process on foreign trade is likely to affect the country’s balance of payments going forward. Hans warned that the extent of the impact will depend on the Kingdom’s oil prices.
The slump in oil prices threatens to impact the country’s economic diversification plans and revenue. The country initiated an oil price war with Russia following failure to agree on production cuts.