Back only as far as the 1950s, Saudi Arabia received a major part of its gross national revenue from taxes levied upon religious pilgrims coming to Mecca to perform Umrah or Haj. In the 1930s, it was just about the sole source of government income. Taxes on pilgrims were abandoned once oil revenues started flowing in, but Haj remains an important part of the Saudi economy. Arab News reports that as much as 3% of the country’s GDP comes from what pilgrims spend in the country. That amounts to US$16.5 billion or SR62 billion per year.

While the cities of Mecca and Medina see most of this income, all the support services, from food suppliers to airlines are benefiting.

Revenue from pilgrims makes 3% of Saudi GDP

Economists have estimated the Kingdom’s revenues from Haj and Umrah services in 2012 at more than SR 62 billion ($ 16.5 billion), 10 percent up from 2011 figures.
They also said that Haj revenue accounted for three percent of the country’s gross domestic product (GDP).

Fahd Al-Andeejani, professor of economics, said there are good prospects for the development of national industries. “We need more specialized markets to meet the needs of pilgrims who come for Haj and Umrah,” he added.

The professor said there are good prospects to establish Asian, European and American restaurants in Makkah and Madinah while highlighting the growing purchasing power of Saudis as a result of increase in salaries and oil prices.

Al-Andeejani estimated the annual expenditure of an Umrah pilgrim at $ 10,000. More than seven million pilgrims come to the Kingdom for Haj and Umrah and the money they spend could boost the Kingdom’s economy.

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