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Economy of Saudi Arabia
Kingdom Tower at night.JPG
Currency Saudi Riyal (SAR)
Fiscal year Calendar year
Trade organisations WTO, OPEC
GDP $592.886 billion (PPP; 22nd)[1]
$469.426 billion (nominal; 23rd)[1]
GDP growth -0.6% (2009 est.)
GDP per capita $23,814 (PPP; 38th)[1]
$18,855 (nominal; 41st)[1]
GDP by sector agriculture: 3.2%; industry: 60.4%; services: 36.4% (2009 est.)
Inflation (CPI) 5% (2009 est.)
Labour force 6.922 million (2009 est.) note: about 80% of the labor force is non-national
Labour force
by occupation
agriculture: 6.7%; industry: 21.4%; services: 71.9% (2005 est.)
Unemployment 11.6% among Saudi males (2009 est.)
Main industries crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction
Exports $180.5 billion (2009 est.)
Export goods petroleum and petroleum products 90%
Main export partners US 17.2%, Japan 15.3%, South Korea 10.2%, China 9.4%, India 5.9%, Taiwan 4.6%, Singapore 4.4% (2008)
Imports $86.61 billion (2009 est.)
Import goods machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles
Main import partners US 12%, China 10.4%, Japan 7.6%, Germany 7.3%, South Korea 5.1%, Italy 4.7%, India 4.5%, UK 4% (2008)
Gross external debt $72.45 billion (31 December 2009 est.)
Public finances
Public debt 20.3% of GDP (2009 est.)
Revenues $167.7 billion (2009 est.)
Expenses $164.3 billion (2009 est.)
Economic aid (Donor) $100 million in 1993 to Lebanon; since 2000, Saudi Arabia has committed $307 million to Palestinians; pledged $240 million to Afghanistan; pledged $1 billion in export guarantees and soft loans to Iraq.
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars

Saudi Arabia has an oil-based economy with strong government control over major economic activities. Saudi Arabia possesses 25% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC.

Saudi Arabia's economy is a centrally planned economy. Private enterprises do exist, they are however regulated by the Saudi government.


Economic overview

The petroleum sector accounts for roughly 45% of budget revenues, 45% of GDP, and 90% of export earnings. About 40% of GDP comes from the private sector. Roughly five and a half million foreign workers play an important role in the Saudi economy, for example, in the oil and service sectors. The government is encouraging private sector growth to lessen the kingdom's dependence on oil and increase employment opportunities for the swelling Saudi population. The government has begun to permit private sector and foreign investor participation in the power generation and telecom sectors. As part of its effort to attract foreign investment and diversify the economy, Saudi Arabia acceded to the WTO in 2005 after many years of negotiations. With high oil revenues enabling the government to post large budget surpluses, Riyadh has been able to substantially boost spending on job training and education, infrastructure development, and government salaries.

Macro-economic trend

Current GDP per capita of Saudi Arabia soared by a world record-breaking 1,858% in the Seventies riding on the back of the global oil boom. However, this bubble was unsustainable and consequently the GDP per capita shrank by 58% in the Eighties. However successful diversification efforts helped register a growth of 20% in the Nineties.

This is a chart of trend of gross domestic product of Saudi Arabia at market prices estimated by the International Monetary Fund with figures in millions of Saudi Arabian Riyals.

Year Gross Domestic Product US Dollar Exchange Inflation Index
Per Capita Income
(as % of USA)
1980 546,602 3.59 Saudi Arabian Riyals 95 143.84
1985 376,318 3.62 Saudi Arabian Riyals 92 49.33
1990 437,334 3.74 Saudi Arabian Riyals 91 33.13
1995 533,504 3.74 Saudi Arabian Riyals 101 28.29
2000 706,657 3.74 Saudi Arabian Riyals 100 26.50
2005 1,152,600 3.74 Saudi Arabian Riyals 100 32.53

For purchasing power parity comparisons, the US Dollar is exchanged at 3.41 Saudi Arabian Riyals only. Average wages in 2007 hover around $76–92 per day.

As of August 2009 it was reported that Saudi Arabia is the strongest Arab economy according to World Bank [2].

Oil industry

Graph of Top Oil Producing Counties, including Saudi Arabia Production [3]

Oil was discovered in Saudi Arabia by U.S. geologists in the 1930s, although largescale production did not begin until after World War II. Oil wealth has made possible rapid economic development, which began in earnest in the 1960s and accelerated spectacularly in the 1970s, transforming the kingdom.

Saudi oil reserves are the largest in the world, and Saudi Arabia is the world's leading oil producer and exporter. Oil accounts for more than 90% of the country's exports and nearly 75% of government revenues. Proven reserves are estimated to be 260 billion barrels (41 km³), about one-quarter of world oil reserves.

More than 95% of all Saudi oil is produced on behalf of the Saudi Government by the parastatal giant Saudi Aramco. In June 1993, Saudi Aramco absorbed the state marketing and refining company (SAMAREC), becoming the world's largest fully integrated oil company. Most Saudi oil exports move by tanker from Persian Gulf terminals at Ras Tanura and Ju'aymah. The remaining oil exports are transported via the east-west pipeline across the kingdom to the Red Sea port of Yanbu. A major new gas initiative promises to bring significant investment by U.S. and European oil companies to develop nonassociated gas fields in three separate parts of Saudi Arabia. Following final technical agreements with concession awardees in December 2001, development should begin in 2002.

Due to a sharp rise in petroleum revenues in 1974 following the 1973 Arab-Israeli war, Saudi Arabia became one of the fastest-growing economies in the world. It enjoyed a substantial surplus in its overall trade with other countries; imports increased rapidly; and ample government revenues were available for development, defense, and aid to other Arab and Islamic countries.

But higher oil prices led to development of more oil fields around the world and reduced global consumption. The result, beginning in the mid-1980s, was a worldwide oil glut, which introduced an element of planning uncertainty for the first time in a decade. Saudi oil production, which had increased to almost 10 million barrels (1.6 million m³) per day during 1980-81, dropped to about 2 million barrels/day (300,000 m³/day) in 1985. Budgetary deficits developed, and the government drew down its foreign assets. Responding to financial pressures, Saudi Arabia gave up its role as the "swing producer" within OPEC in the summer of 1985 and accepted a production quota. Since then, Saudi oil policy has been guided by a desire to maintain market and quota shares.

However, beginning in late 1997, Saudi Arabia again faced the challenge of low oil prices. Due to a combination of factors--the East Asian economic crises, a warm winter in the West caused by El Niño, and an increase in non-OPEC oil production--demand for oil slowed and pulled oil prices down by more than one-third.

Saudi Arabia was a key player in coordinating the successful 1999 campaign of OPEC and other oil-producing countries to raise the price of oil to its highest level since the Gulf War by managing production and supply of petroleum. That same year, Saudi Arabia established the Supreme Economic Council to formulate and better coordinate economic development policies in order to accelerate institutional and industrial reform.

Saudi Arabia has announced plans to invest about $46 billion in three of the world’s largest and most ambitious petrochemical projects. These include the $27 billion Ras Tanura integrated refinery and petrochemical project, the $9 billion Saudi Kayan petrochemical complex at Jubail Industrial City, and the $10 billion Petro Rabigh refinery upgrade project. Together, the three projects will employ more than 150,000 technicians and engineers working around the clock.[4] Upon completion in 2015-16, the Ras Tanura integrated refinery and petrochemicals project will become the world’s largest petrochemical facility of its kind with a combined production capacity of 11 million tons per year of different petrochemical and chemical products. The products will include ethylene, propylene, aromatics, polyethylene, ethylene oxide, chlorine derivatives and glycol.[5]



The Sabic Basic Industries Corporation SABIC was established by a royal decree in 1976 to produce chemicals, polymers and fertilizers. In 2008, SABIC was Asia's largest (in terms of market capitalization) and most profitable publicly listed non-oil company, the world's 4th largest petrochemical company, ranked 186th as world's largest corporation on the Fortune Global 500 for 2009, the second largest producer of ethylene glycol and methanol in the world, the third largest producer of polyethylene and overall the fourth largest producer of polypropylene and polyolefin. Standard and Poor's and Fitch Ratings claimed SABIC to be the world's largest producer of polymers and the Persian Gulf region's largest steel producer for 2005 and assigned SABIC 'A' corporate credit rating. In 2008, Fortune 500 ranking records SABIC revenues at $40.2 billion, profits at $5.8 billion and assets standing at $72.4 billion.[6]

Expansion operations and investments are projected to amount to USD20 billion in 2007 and USD70 billion until 2020. The overall total production in 1985 was 6.3 million metric tons (mmt); by the end of 2008 it had reached 56 mmt and by 2020, SABIC intends to produce over 135 mmt per year.[7] SABIC established in June 2006 "SABIC Sukuk Company" to issue Islamic bonds (Sukuk) that are estimated to range between SAR1 billion (USD266.67 million) and SAR3 billion (USD800 million).

Net profits of SABIC in 2008 touched SR 22 billion (US$ 5.86 billion), while total assets stood at SR 272 billion (US$ 72.5 billion) at the end of 2008 and the value of current assets at the end of 2008 stood at SR 95 billion (US$ 25 billion).[8]

Maaden (company)

Ma'aden was formed as a Saudi joint stock company on 23 March 1997 for the purpose of facilitating the development of Saudi Arabia’s mineral resources. Ma'aden's activities have focused on its active gold business which has grown in recent years to include the operation of five gold mines: Mahd Ad Dahab, Al Hajar, Sukhaybarat, Bulghah, and Al Amar. Ma'aden is now expanding its activities beyond its gold business with the development of its Phosphate Project, Aluminium Project, and Other Projects. In addition, since its formation, Ma'aden (through the Ministry of Petroleum & Mineral Resources) has collaborated with the Government and local legislators to develop a regulatory framework for the governance of the mining industry.

On 20 December 2009, Maaden signed an agreement with US aluminium giant Alcoa to build a $10.8 billion aluminium complex. Under the agreement, the two firms will build a 1.8 million tonnes per year aluminium refinery and a 740,000 million tonnes per year smelter in Ras Azzour. The smelter is slated to start production in 2013 while the refinery would come online in 2014.[9]


Saudi Arabian exports in 2006

In recent years, Saudi Arabia sought to join the World Trade Organization. Negotiations have focused on the degree to which Saudi Arabia is willing to increase market access to foreign goods and services and the timeframe for becoming fully compliant with World Trade Organization obligations. In April 2000, the government established the Saudi Arabian General Investment Authority to encourage foreign direct investment in Saudi Arabia. Saudi Arabia maintains a negative list of sectors in which foreign investment is prohibited, but the government plans to open some closed sectors such as telecommunications, insurance, and power transmission/distribution over time. As of November 2005 , Saudi Arabia was officially approved to enter World Trade Organization.

Doing Business

The Kingdom of Saudi Arabia has been rated as the 13th most economically competitive country in the world, according to the International Finance Corporation (IFC)-World Bank annual "Doing Business" report issued for 2010. The report highlighted the rapid rate of economic growth among Middle Eastern countries, specifically Saudi Arabia, as a result of economic sector reform. For the fifth consecutive year, Saudi Arabia was ranked as the best place to do business in the entire Middle East and the Arab World. Since 2004, the Kingdom has advanced its overall Doing Business rankings, from 67th to 13th.[10][11]

Saudi Arabian companies dominate 2009's "MEED 100", with companies listed on the Tadawul accounting for 29 out of the region’s 100 biggest publicly quoted companies ranked by market capitalisation. Just three of the 20 companies that have dropped out of the top 100 over the past year are listed on the Saudi stock exchange.[12]


As of 2007, non-oil manufacturing contributed 10% to Saudi Arabian GDP and less than 6% of total employment. [2]

Through 5-year development plans, the government has sought to allocate its petroleum income to transform its relatively undeveloped, oil-based economy into that of a modern industrial state while maintaining the kingdom's traditional Islamic values and customs. Although economic planners have not achieved all their goals, the economy has progressed rapidly. Oil wealth has increased the standard of living of most Saudis. However, significant population growth has strained the government's ability to finance further improvements in the country's standard of living. Heavy dependence on petroleum revenue continues, but industry and agriculture now account for a larger share of economic activity. The mismatch between the job skills of Saudi graduates and the needs of the private job market at all levels remains the principal obstacle to economic diversification and development; about 4.6 million non-Saudis are employed in the economy.

Saudi Arabia's first two development plans, covering the 1970s, emphasized infrastructure. The results were impressive — the total length of paved highways tripled, power generation increased by a multiple of 28, and the capacity of the seaports grew tenfold. For the third plan (1980-85), the emphasis changed. Spending on infrastructure declined, but it rose markedly on education, health, and social services. The share for diversifying and expanding productive sectors of the economy (primarily industry) did not rise as planned, but the two industrial cities of Jubail and Yanbu--built around the use of the country's oil and gas to produce steel, petrochemicals, fertilizer, and refined oil products--were largely completed.

In the fourth plan (1985-90), the country's basic infrastructure was viewed as largely complete, but education and training remained areas of concern. Private enterprise was encouraged, and foreign investment in the form of joint ventures with Saudi public and private companies was welcomed. The private sector became more important, rising to 70% of non-oil GDP by 1987. While still concentrated in trade and commerce, private investment increased in industry, agriculture, banking, and construction companies. These private investments were supported by generous government financing and incentive programs. The objective was for the private sector to have 70% to 80% ownership in most joint venture enterprises.

The fifth plan (1990-95) emphasized consolidation of the country's defenses; improved and more efficient government social services; regional development; and, most importantly, creating greater private-sector employment opportunities for Saudis by reducing the number of foreign workers.

The sixth plan (1996-2000) focused on lowering the cost of government services without cutting them and sought to expand educational training programs. The plan called for reducing the kingdom's dependence on the petroleum sector by diversifying economic activity, particularly in the private sector, with special emphasis on industry and agriculture. It also continued the effort to "Saudiize" the labor force.

The seventh plan (2000-2004) focuses more on economic diversification and a greater role of the private sector in the Saudi economy. For the period 2000-2004, the Saudi Government aims at an average GDP growth rate of 3.16% each year, with projected growths of 5.04% for the private sector and 4.01% for the non-oil sector. The government also has set a target of creating 817,300 new jobs for Saudi nationals.

Advertising expenditures have reached new peaks due to emphasis on value-added manufacturing. (pdf)


Saudi Arabia has one stock exchange the Tadawul and its financial markets are regulated by the Capital Market Authority (Saudi Arabia). The stock market capitalisation of listed companies in Saudi Arabia was valued at $646 billion in 2005 by the World Bank. [13]

ICT Services

Saudi Arabia is currently enjoying a massive boom in its personal computer industry since the deregulation of 2002. PC per capita has exploded to nearly 43% of the population in 2005 from just 13% in 2002 leapfrogging over the rest of West Asia.[citation needed]

The electrical and electronics market was estimated to be around $3.5 billion in 2004. [3]

The e-commerce market was estimated at just over $1 billion in 2001. (pdf)


See also

External links


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