School year is ending: Will that impact Gulf economies?
When back to school arrives, it grabs headlines, as the media talks extensively about schools and the logistical and administrative preparations for the start of the academic year, and what that entails for sector revenues.
But rarely does the media deal with the subject in a reverse manner, i.e. End of school, and its impact on the economy.
Travel and tourism
There is no doubt that the end of the school year in the summer constitutes an important station for the Gulf economies.
Tourism, for example, is one of the sectors that most benefits, with a large percentage of families spending their summer vacations within the GCC.
The Arabian Travel Market expects the travel and tourism sector in the Middle East to generate $246 billion in revenues in 2022.
In the UAE, the tourism sector has made a strong comeback, and the hospitality sector has surpassed pre-pandemic levels and is, therefore, more attractive to family tourists.
The growth was driven by the increase in the number of foreign visitors, especially from the GCC, which coincides with the end of the academic year.
According to the World Tourism Organization, travelers from GCC countries spend 6.5 times the global average.
40% of travelers from these countries spent more than $10,000 on their last trip to Europe.
The information also indicates that travelers from Saudi are the ones who spend the most on travel worldwide.
On the other hand, the UAE is the most popular destination in the MENA, followed by Saudi, Kuwait, Egypt, and Qatar.
But this year, the Sultanate of Oman was added to the list of destinations, after efforts were made to develop its tourism sectors.
A recent report indicated that Gulf nationals from the UAE, Qatar, Kuwait, Saudi Arabia and Bahrain came first, with nearly 45,000 visitors (36.9 percent) of the number of visitors to the Sultanate last February.
As for Egypt, it is expected that Arab tourists will start arriving in the next few weeks, after the start of the end of the school year, to vacation in Arab countries, especially those in the Gulf.
Expectations indicate that the number of Arab tourists will exceed 2 million during the summer season. It started in early June and lasts till the end of September.
Another sector that benefits from the end of the school year is “entertainment”.
Gulf countries are garnering attention as tourist destinations, especially in the summer season, because of the myriad of activities and festivals, targeting children, teenagers and families alike.
Saudi’s entertainment sector is expected to witness investment flows of about $69 billion, and provide more than 200,000 jobs by 2030.
It also aspires to achieve revenues from the sector amounting to 36 billion riyals ($9.6 billion) by 2030.
Revenues at points of sale related to this sector grew 13.5 percent in the past year to reach 14.11 billion riyals. Experts expect that the size of the entertainment sector in Saudi Arabia will reach 240 billion riyals (about $64 billion).
As for the UAE, it is a pioneer in this sector, as the Blueloop platform – which specializes in the latest news and developments in the entertainment industry in the world – ranked Ferrari World Abu Dhabi and Warner Bros Abu Dhabi among the list of the 100 most prominent facilities and attractions in the world.
According to the figures, the entertainment industry in the UAE is expected to expand at a compound annual growth rate of 9 percent from 2021 to 2028.
The UAE seeks to increase the contribution of the tourism sector, including leisure tourism, to the GDP to reach 15 percent by 2030.
Retail experts consider summer surprises and offers an important factor in revitalizing the sector.
In the UAE, a report issued by Majid Al Futtaim Holding revealed that consumer spending in retail stores increased by 14 percent in the first quarter of 2022 in the UAE compared to the same period in 2019.
Most sectors of the retail economy, including food and beverages, pharmacy, health, hotels, dutyfree, electronics, and home furnishings, expanded 19 percent compared to the first three months of 2019.
In addition, apparel sales in the first quarter increased by 15 percent compared to the previous three years, supported by spending on non-luxury categories and accessories, watches, and jewelry.
As for Saudi Arabia, it expected growth in this market to reach 20 percent this year. The retail trade represents 12 percent of Riyadh’s gross domestic product.
Sales of entertainment and cultural services grew 16% year-on-year, compared to a 1% growth in electronics sales.
As for the sectors that are expected to grow in the future in Saudi, they are pharmaceuticals and food and beverages, in particular, with a compound annual growth rate of 10 percent and 6 percent until 2025.