beyondbrics

This year’s Hajj, the Muslim religion’s most important event of the year, saw up to 3m devout, roughly 2m of whom come from abroad, worshipping in Saudi Arabia. The Arab world’s largest economy faced a huge logistical task to cater and care for this mass of humanity.

Happily, the economic benefits those pilgrims brought with them were just as a big. According to some estimates, the Saudi economy enjoyed an injection of more than $30bn from the  five-day holiday which ended on Sunday.

The Hajj is one of the five pillars of Islam and one that every Muslim is supposed to perform once in their lifetime if both physically and financially able. That edict translates into millions of Muslims every year descending upon Mecca, swelling its population of about 1.5m to triple its normal size.

An influx of 2m people brings obvious economic benefits to a country; hotels will be booked, food will be bought, transport will be engaged. Business Monitor International noted that sales of gifts and souvenirs in 2008 were estimated to have risen by at least $1.1bn due to shopping by Hajj pilgrims.

And according to BMI, Saudi Arabia’s nominal GDP in 2011 of some $465bn is expected to grow by around 4 per cent annually between now and 2015. That can only be helped by the Hajj, the monetary value of which, according to Jasim Ali, writing in Gulf News, exceeds $30bn, or 6 per cent of GDP. Previous estimates have put the overall impact of the Hajj upon the Saudi economy even higher at over $50bn.

Saudi Arabia is ready to invest in order to accommodate its growing pilgrim population, which it expects to double in the next 30 years. As Saud Masu, chief of SM Advisory consultants told Elan magazine, the Saudi government has plans to spend billions on infrastructure of the coming years and according to Mecca’s mayor about $125bn in projects will be developed in and around Mecca to address the growing needs of the pilgrim population.

If that investment can gradually draw Saudi Arabia away from oil dependency and create jobs for the country’s youth (upwards of 30 per cent of whom are unemployed), it will be money well spent.

Related reading:
Iran cleric in pilgrimage plea, FT
Saudi Arabia: $500bn and counting, beyondbrics
Gulf petrodollars stay home for once, beyondbrics