How important is the Umrah pilgrimage for the Saudi economy?

Saudi Arabia has banned the entry of foreign pilgrims into the country as the world tries to contain the global outbreak of the coronavirus.

The decision comes as the illness establishes a foothold in Europe and the Middle East, with Italy and Iran in particular affected.

While Riyadh has issued no information about how long the ban will last, a global pandemic could impact pilgrimages during Ramadan, which is only a couple of months away, and the Hajj pilgrimage that follows soon after.

The ban applies to the Islam’s holiest city of Mecca and also its second holiest city of Medina.

While the overwhelming majority of Saudi Arabia’s wealth comes from its fossil fuel deposits, pilgrimages by Muslims are also a significant contributor to its economy.

The kingdom relies on oil revenues for 87 percent of its budget, and oil related industries account for 42 percent of its GDP.

Together the Hajj and the Umrah add $12 billion to Saudi Arabia’s GDP per year, which accounts for 20 percent of the country’s non-oil GDP and seven percent of total GDP.

In the Hijri year of 1439, which was between 2017-2018, more than 6.7 million Muslims visited the country for the Umrah. 

The Saudi government has ambitious plans to increase revenues from pilgrimage to $150 billion by 2022. It hopes that well off visitors will be willing to pay thousands of dollars per night to stay in recently constructed hotels’ suites, which include views of the Kaaba. 

About 43 percent of Umrah prayers visit Saudi Arabia in the Islamic months of Rajab, Shaban and Ramadan, which makes these three months the most popular time for pilgrimages outside of the Hajj.

The Saudi decision to suspend entry for foreign pilgrims coincides with the Islamic date of Rajab 3.

Besides the direct monetary benefit that pilgrims bring, more than half a million people are employed in the tourism industry in Saudi Arabia, which is overwhelmingly religiously oriented.