Socioeconomic spillovers of COVID-19: case of Saudi Arabia

Abstract

Purpose

With the global outbreak of COVID-19 that has made the economic activities standstill, countries have taken immediate measures to safeguard not only the human lives but also the economies. This study investigates empirically the lockdown impact of current pandemic on the Saudi economy.

Design/methodology/approach

The study employs inoperability input–output model (IIOM) on the input–output table (IOT) of Saudi Arabia for the analysis.

Findings

Findings show that with the closure of few sectors for the period of two months, the GDP declined to 6.49%. Findings also show a negative impact on consumption, investments and exports.

Research limitations/implications

One limitation of current study is that it uses IOTs which lack primary and secondary income distribution that is vital for presenting complete interindustry connections in the analysis. The interindustry structures relate to the consumption structures which ultimately lead to the income distribution and affect the consumption behaviors of economic agents. Hence, the complete income circular flow is not incorporated in IIOM using IOT. The findings of current study would be well grounded if it endogenized the primary and secondary income distribution.

Practical implications

The practical implication of this study is the use of IIOM for anticipating the potential loss against the backdrop of catastrophes and pandemics. The IIOM has the capability to predict the economic effects of disruptive events and hence the policy-makers can better predict and devise prudent policies to avoid the likely threats to the economy.

Originality/value

The current situation is unprecedented, and it is challenging for governments to forecast the economic repercussions. Several economic sectors have been inoperative due to lockdown implemented by the governments. This study empirically estimated the inoperability produced by the current pandemic. The findings are consistent with other estimated statistics, thereby proving the efficacy of IIOM to anticipate the economic repercussions of natural hazards.

Citation

Ahmed, I., Medabesh, A.M., Mehrez, K.H., Shili, N., Socci, C. and Deriu, S. (2023), "Socioeconomic spillovers of COVID-19: case of Saudi Arabia", Kybernetes, Vol. 52 No. 3, pp. 1070-1093. https://doi.org/10.1108/K-04-2021-0275