Economic trends
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 branches 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.
International trade
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.
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Last updates: February 2012
