CAIRO - As more than 1.5 billion Muslims worldwide observe Eid el-Adha (the Muslim feast of sacrifice) Tuesday, roughly four million are performing hajj rituals in the holy cities of Mecca and Medina in Saudi Arabia. The number of pilgrims has risen from 2.5 million last year to a record high of four million, according to Saudi officials. As it is said in economics, there's no free lunch, and there's no free pilgrimage either. From an economic perspective, analysts say Islam's fifth pillar is a "blessing" for Saudi Arabia as it injects liquidity into its market and pushes demand. "Pilgrimage in general is a growing annual source of income, injecting liquidity into the Saudi economy. "It increases aggregate demand in the Saudi market," Sherif Shawqi, a researcher at Alexandria University, told the Egyptian Mail in an interview. "Think how much four million people or more, gathering in Mecca, will spend. Pushing up demand in Saudi Arabia will increase employment and boost growth in many sectors like hotels, transport and trade," Shawqi said, adding that the Arab oil-rich country had spent a lot over the past decade to improve the quality of facilities in the holy cities. In a bid to ease pilgrim traffic, Saudi Arabia has spent $1.8 billion on the Mashair Railway, which connects the three holy sites of Mina, Muzdalifah and Mount Arafat. "Egypt's economy gains too as travel agents, transport firms and the national carrier will take the lion's share in carrying local pilgrims to Mecca and Medina," he said. The number of Egyptian pilgrims totals 78,000 this year, and EgyptAir is carrying around 85 per cent of them, Egypt's Minister of Civil Aviation Ahmed Shafiq was quoted by local media as saying this week. "But from a macroeconomic viewpoint, Egyptian pilgrims spend much money in Saudi Arabia on gifts and other things, seeing it as a shopping opportunity. This unnecessary shopping has a negative effect on Egypt's balance of payments as it adds to the country's import bill," Shawqi explained. Hajj is a religious ritual, but it has turned into a shopping spree for many Muslims. Pilgrims from all over the world are expected to spend around $8 billion at the holy cities this year, according to Saudi official statistics. Food alone accounts for roughly 40 per cent of expenditure due to growing inflation in Saudi Arabia. Saudi Arabia's annual inflation rate stood at 5.8 per cent in October, according to the Saudi Press Agency. Inflation in the largest Arab economy hit an 18-month high with 6.1 per cent in August. Food prices in Saudi Arabia jumped by 1.6 per cent in October, while housing costs rose by 0.6 per cent, according to Saudi official reports. Higher prices in Saudi Arabia would force Egyptian pilgrims to spend more, analysts say. Egyptians spend $3 billion on hajj and umrah (the lesser pilgrimage that can be performed all year round), according to the State-run Central Agency for Mobilisation and Statistics (CAPMAS). "For example, if 80,000 Egyptian pilgrims spend 1,000 Saudi riyals on average, the total will exceed 80 million riyals. This is too much. It is a culture that should be changed," he said. Over the past three weeks, the Saudi currency has been on the rise on the local market. The US dollar and other currencies have also inched up due to "higher-than-expected seasonal demand", as one trader told this newspaper. "The Saudi currency rose from LE1.50 to LE1.56 over the past two weeks," said Mahmoud el-Moghazy, a trader at a Cairo-based forex agency. "Unfortunately, a black market has appeared; many speculators bought the Saudi riyal months before the start of the pilgrimage season to make easy profits," el-Moghazy said, adding that the rise in the US dollar had nourished the comeback of the black market. The greenback has been gaining more ground on the local market, rising from LE5.68 to LE5.74. In October, the dollar hit a four-year high against the Egyptian pound, despite falling against other major currencies globally. Foreign exchange turbulences are a global trend, el-Moghazy argued, calling on the Government to take antiprofiteering measures. "A free foreign exchange market doesn't mean the Government has to wash its hands. Supervision is a must, and it should interfere when necessary to restore market stability," he said. Will the Saudi riyal continue to rise after the hajj season? El-Moghazy doesn't think so. "The riyal is linked to the US dollar. The greenback's rise has pushed up other linked currencies, namely in the Arab Gulf region. The Saudi riyal is expected to fall to around 1.50 against the Egyptian pound in the coming weeks when the high season ends," he predicted.
