Economic Trends/Outlook in Saudi Arabia

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Economic Overview

The Saudi Arabian economy is entirely based on oil. The country has the largest oil reserves in the World and is also the World's biggest oil producer and exporter. Oil accounts for more than 90% of the country's exports and nearly 80% of government revenues. The recovery of the demand in 2010 helped to stabilize growth and offers hope for a favorable recovery in 2011.

The big construction works policy led by the government as well as direct foreign investments and the solidity of the banking and financial system have allowed this country to become the first economy in the region and one of the major ones in the world.

Inflation, which had reached a record 10% in 2008, mainly due to the increase in the prices of food products has decreased. In addition to this, the kingdom’s authorities wish to abolish all the existing subsidies, which will in fact lead to an increase in prices.

The government wants to reduce the kingdom's dependence on the oil sector by diversifying its economic activities and in developing mainly the agricultural, food, and industry sectors. The kingdom has a stable and high-quality banking and financial system.

Private investments are supported by generous government financing and incentive plans. The standard of living is one of the highest in the region with USD 15,352 GDP/inhabitant. The country is still marked by an unemployment rate of about 11%. Tourism generates highly significant revenues (nearly 4 million tourists per year), exclusively on account of the pilgrimage to Mecca.

Main Indicators 2009 2010 2011 2012 2013
GDP (billions USD) 376.27e 443.69e 578.57e 606.02e 628.12e
GDP (Constant Prices, Annual % Change) 0.6e 3.7e 7.5e 3.0e 3.4e
GDP per Capita (USD) 14,745e 16,996e 21,685e 22,225e 22,540e
General Government Gross Debt (in % of GDP) 16.0e 10.8e 8.3e 7.1e 6.2e
Inflation Rate (%) 5.1e 5.4e 6.0e 5.6e 4.3e
Unemployment Rate (% of the Labor Force) 10.5e 10.5e - - -
Current Account (billions USD) 20.48e 39.86e 51.62e 64.66e -
Current Account (in % of GDP) 5.5e 9.1e 10.8e 12.5e -

Source: IMF - World Economic Outlook Database

Note: (e) Estimated Data


Main Sectors of Industry

Agriculture accounts for 3% of the GDP and employs 15% of the active population. It is not a very productive sector despite the huge state investments. Saudi Arabia imports most of its agricultural and food product requirements because of the geographical and climatic contraints. Water scarcity is a serious regional problem that the country is likely to face in the coming years, as growing cultivation of wheat presents a strong threat of water depletion.

The industrial sector represents two thirds of the GDP. It is dominated by non-manufacturing activities (oil drilling). The industrial sector portion, other than oil, is growing due to Saudi state investments, to diversify the economy, the kingdom having tapped into its financial reserves accumulated by the soaring oil prices.

Lastly, services represent 22% of the GDP. This sector is mainly dominated by tourism, financial and insurance services and the banking sector.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.7 19.8 75.4
Value Added (in % of GDP) 2.3 69.3 28.4
Value Added (Annual % Change) 1.1 4.8 4.2

Source: World Bank - Last Available Data.

For more detailed background on Industries in Saudi Arabia, click here.

Indicator of Economic Freedom

Moderately free
World Rank:
Regional Rank:

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation


Country Risk

See the Country Risk Analysis Provided By Ducroire.


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