Business Environment in Saudi Arabia
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.
|GDP (billions USD)||376.27||443.69e||578.57||606.02||628.12|
|GDP (Constant Prices, Annual % Change)||0.6||3.7e||7.5e||3.0e||3.4e|
|GDP per Capita (USD)||14,745||16,996e||21,685e||22,225e||22,540e|
|Inflation Rate (%)||5.1e||5.4e||6.0||5.6e||4.3|
|Unemployment Rate (% of the Labor Force)||10.5||10.5||-||-||-|
|Current Account (billions USD)||20.48||39.86e||51.62e||64.66||-|
|Current Account (in % of GDP)||5.5e||9.1e||10.8||12.5||-|
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.
|Saudi Riyal (SAR) - Average Annual Exchange Rate For 1 USD||3.75||3.75||3.75||3.75||3.75|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
The foreign trade share in Saudi Arabia is nearly 90% of the GDP. The country recorded a highly significant trade surplus in 2008. Despite the falling oil prices, the country should show a positive balance in the forthcoming years.
Saudi Arabia's main export partners are the United States, China and Japan, followed by Germany and U.A.E., as well as the Southeast Asian countries. The country exports mainly crude oil (the black gold represents 90% of its exports), plastics, organic products and chemicals.
Its main import partners are the United States, Japan, China and Korea, followed by other Asian countries (India, Taiwan, Singapore). Saudi Arabia mainly imports vehicles, machinery, electrical equipment, iron, steel and food products.
In order to promote international trade, attract foreign investment and diversify the non-oil sectors, the government has announced plans to establish four "economic cities" in different regions of the country.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||69,800||90,214||115,134||95,552||102,000|
|Exports of Goods (million USD)||211,305||233,329||313,462||192,314||254,000|
|Imports of Services (million USD)||29,488||45,914||49,572||47,039||-|
|Exports of Services (million USD)||13,973||15,743||9,128||9,428||-|
|Imports of Goods and Services (Annual % Change)||25.2||21.6||-||-||-|
|Exports of Goods and Services (Annual % Change)||3.4||3.0||-||-||-|
|Imports of Goods and Services (in % of GDP)||31.8||37.8||37.2||42.6||-|
|Exports of Goods and Services (in % of GDP)||63.2||64.9||68.0||52.7||-|
|Trade Balance (million USD)||147,391||150,716||212,027||105,206||-|
|Trade Balance (Including Service) (million USD)||112,012||104,037||147,031||-||-|
|Foreign Trade (in % of GDP)||95.1||102.7||105.1||95.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
|Main Customers |
(% of Exports)
|United Arab Emirates||3.6%|
|Other partnersClose extended list||49.1%|
|Main Suppliers |
(% of Imports)
|United Arab Emirates||2.5%|
|Other partnersClose extended list||54.6%|
Sources of General Economic Information
- Ministry of Finance
Ministry of Economy and Planning
Ministry of Petroleum and Mineral Resources
Ministry of Commerce and Industry
Ministry of Agriculture and Water
- Statistical Office
- Central Department of Statistics and Information
- Central Bank
- The Saudi Arabian Monetary Agency (SAMA)
- Stock Exchange
- Saudi Stock Exchange (Tadawul)
- Search Engines
- Saudi info
Saudi on line
- Economic Portals
- Economy watch
- Executive Power
- King is both the chief of the state and head of the government. The monarch is hereditary. Council of Ministers (cabinet) is appointed by the monarch and includes many royal family members. The Council of Ministers has both legislative and executive powers, subject to the King's approval.
- Legislative Power
- There is no elected legislature in Saudi Arabia. A Consultative Council was appointed in August 1993 which has 120 members and a chairman appointed by the King for four-year terms. This Council has limited powers and does not affect decision making or power structures in a meaningful way. The population of Saudia Arabia has limited political rights.
- Main Political Parties
- No political parties are allowed in Saudi Arabia. However, a party called Green Party of Saudi Arabia, which promotes the values of the worldwide Green movement, exists as an illegal organization. The first Saudi Arabian municipal elections were held in the year 2005.
- Current Political Leaders
- King and Prime Minister: Abd Allah ibn `Abd al-`Aziz Al Faysal Al Sa`ud (since August 2005) - hereditary.
Heir Apparent: Crown Prince SULTAN bin Abd al- Aziz Al Saud - half brother of the King.
- Next Election Dates
- Municipal elections, scheduled for 2009, has been postponed indefinitely.
Indicator of Freedom of the Press
- World Rank:
- 2 places down compared to 2008
Indicator of Political Freedom
- Not Free
- Political Freedom:
- Civil Liberties:
Any Comments About This Content? Report It to Us.
2012 Country Commercial Guide for U.S. Companies doing business in Saudi Arabia.
U.S. Commercial Service Poland on 24 Sep 2012 related to Business Environment in Saudi Arabia
Oil plays an important role in Saudi Arabia’s economy, accounting for about 90% of exports and 80% of government revenue.
Hong Kong Trade Development Council (HKTDC) on 30 Jun 2012 related to Business Environment in Saudi Arabia
Oil plays an important role in Saudi Arabia’s economy, accounting for over 70% of exports and 85% of government revenue. Production and refinery of oil are the pillars of the Saudi economy, which account for more than 50% of the country’s GDP.
Hong Kong Trade Development Council (HKTDC) on 31 Oct 2011 related to Business Environment in Saudi Arabia
Financial and business comment from Arabia.
ArabianMoney.net on 28 Mar 2011 related to Business Environment in Saudi Arabia
Saudi Arabia is politically and economically stable, yet lack of transparency is a problem. Openness to trade and investment is improving, and taxes are low.
Euromonitor International on 8 Apr 2010 related to Business Environment in Saudi Arabia
While modern Saudi Arabia has adopted numerous business methods and styles of the West, many cultural differences remain.
U.S. Commercial Service Poland on 1 Jun 2010 related to Business Environment in Saudi Arabia
According to the IMF, the Saudi economy will expand 4.0% this year as increased public expenditure paves the way for sustained economic recovery.
U.S. Commercial Service Poland on 6 May 2010 related to Business Environment in Saudi Arabia
U.S. Department Of Commerce, Poland
Government Trade Promotion, Hong Kong SAR
Global Trade & Products, the United StatesEuromonitor International provides its clientelle with leading research resources for international trade, opportunity...