THE SAUDI ECONOMY

Kingdom of Saudi Arabia

Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia located on the Arabian Peninsula. It covers around 2.15 million km2 of land. Saudi Arabia is the fifth-biggest country fully in Asia, the second-largest in the Arab world, and the largest in Western Asia, occupying almost four-fifths of the Arab Peninsula.

It is bounded on the west by the Red Sea, on the north by Jordan, Iraq, and Kuwait, on the east by the Persian Gulf, Qatar, and the United Arab Emirates, on the southeast by Oman, and on the south by Yemen. Bahrain is an island nation off the east coast of the United Arab Emirates.

Saudi Arabia is separated from Egypt by the Gulf of Aqaba in the northwest, which has a maximum width of 24 kilometers (15 miles). Saudi Arabia is the only country in the world having coastlines on both the Red Sea and the Persian Gulf, and its terrain is mostly made up of desert, lowland, steppe, and mountains. Riyadh is the capital and largest city of Saudi Arabia. The country is home to Mecca and Medina, the world’s two holiest cities for Muslims.

Saudi Arabia discovered oil on March 3, 1938, and numerous further discoveries in the Eastern Province followed. Since then, the country has grown to be the world’s second-largest oil producer and exporter, with the world’s second-largest oil reserves and sixth-largest gas reserves.

The country is classified as a high-income economy by the World Bank, with a very high Human Development Index, and it is the only Arab country to be a member of the G20 major economies.

Saudi Arabia’s economy is the largest in the Middle East and the world’s 18th largest. Saudi Arabia also boasts the world’s second-largest petroleum reserves and is the world’s largest petroleum exporter. It is also home to the fifth-largest known natural gas reserves in the world. Saudi Arabia has the second-highest total estimated value of natural resources, with a total estimated value of US$ 34.2 trillion in 2016.

The oil industry accounts for around 62.8 percent of budget revenues and 66.9 percent of export profits in Saudi Arabia’s command economy. Stopping or reversing the decline in per-capita income, improving the education sector to inject the youth into the workforce and provide them with jobs, expanding the economy, revamping private businesses and residential building construction, and ending corruption and inequality are all challenges facing the Saudi economy.

The oil industry accounts for around 44.9 percent of Saudi Arabia’s nominal gross domestic product, while the private sector accounts for 40 percent. Saudi Arabia’s oil reserves are estimated to be at 260 billion barrels (4.1 x 1010 m3), accounting for around one-fifth of the world’s confirmed total petroleum reserves.

Saudi Arabia is the most populous country in the Gulf area, with a population of 33 million people, and the best-performing economy in the Arab world, with a GDP of $ 785 billion dollars. In the area, Saudi Arabia is the sole G-20 member. The Saudi Arabian government plays a key role in maintaining control over the country’s oil-based economy. The country has around 17 percent of the world’s proven petroleum reserves, is a major player in OPEC, is a major producer and exporter of crude oil, and is the world’s largest oil refiner and natural gas producer.

In 2016, the Saudi Arabian government released Vision 2030, a wide and ambitious reform plan aimed at diversifying the country’s economy away from oil. At the Future Investment Initiative meeting in Riyadh in October 2019, Saudi Arabia’s revamped policies aimed at luring new international investments were emphasized. A total of 298 foreign investors and politicians were in attendance. During the occasion, Saudi Arabia announced the signing of $20 billion in investment transactions, including major partnerships between Saudi and American firms. For the first time in the company’s 86-year existence, Saudi Arabian Oil Company (Aramco) was formally placed on the Saudi Stock Exchange for public purchase in December 2019.

Aramco was the most lucrative corporation in the world in 2018, with a profit of $111 billion dollars (the second-most profitable firm, Apple, made $60 billion). The oil corporation stated that it may be worth $1.7 trillion. The procurements of Saudi Aramco give multiple substantial prospects for American vendors in the energy, construction, and security sectors, including cyber security. The US Commercial Service operates an office in Dhahran, Saudi Arabia’s oil-rich Eastern Province, to help US exporters in interactions with Aramco.

Saudi Arabia is America’s 22nd-largest goods trading partner and, after the UAE, the Gulf region’s second-largest products export market. In 2018, US goods exports totaled $3.6 billion, down 17% from 2017; US imports from Saudi Arabia reached $$24.1 billion, resulting in a $$10.5 billion goods trade imbalance. Transportation equipment (including aircraft but excluding rail) ($$3.8 billion), nuclear machinery ($$1.9 billion), arms and ammunition ($1.5 billion), electric machinery ($1.1 billion), optics, photo, and medical instruments ($0.7 billion), chemicals ($500 million), and cereals ($400 million) are among the most important US exports. Global Trade Atlas is the source of this information. Exports of consumer-oriented food goods from the United States to Saudi Arabia fell by almost 11% to $508 million in 2017. Saudi Arabia is the Gulf Cooperation Council’s top importer of food and agricultural products (GCC).

Saudi Arabia purchased $14.8 billion worth of agricultural and associated items in 2016, according to the most recent available United Nations trade data, a decrease of nearly 23% from 2015. Fewer grain costs, such as corn, wheat, barley, and rice, as well as lower imported amounts of dairy products and frozen broiler chicken, contributed to the reduction. Saudi Arabia imported around $7.8 billion in consumer-oriented food items in 2016, down 20% from 2015.

Food produced in the United States is often thought to be of greater quality than food produced locally or imported from other nations. Despite the fact that U.S. food items are more expensive than imports from Asia and Arab nations, demand for U.S. food products in the Saudi market has been growing in recent years.

Market Overview

Last year (2021) was another difficult, unpredictable year, and it often appear as though the globe is always confronted with problems and threats. Predicting the future has never been more difficult for economists throughout the world.

Forecasting and modeling, on the other hand, have a place and a purpose. Looking forward and recognizing possible future dangers and possibilities is critical as the corporate sector attempts to recover from the COVID-19 epidemic and adjusts to a world more focused than ever on the climate catastrophe.

Despite the fact that the COVID-19 epidemic is still ongoing, the main economies are changing their attention to long-term growth.

SAUDI VISION 2030

Saudi Arabia’s Crown Prince Mohammed bin Salman al-Saud unveiled Vision 2030, a national agenda for economic and social reform aimed at accelerating diversification, increasing investment and economic growth, addressing the housing shortage, opening up tourism, and expanding the kingdom’s production, five years ago.

Vison 2030 is providing an economic boom that is producing new chances for entrepreneurs and investors in practically every sector of the economy five years later, notwithstanding the impact of the Covid-19 epidemic. It also brings with it new difficulties.

Saudi Vision 2030 is a strategy framework aimed at diversifying Saudi Arabia’s economy or income streams, reducing the country’s reliance on oil, and improving public service areas such as health, education, infrastructure, recreation, and tourism.

Reinforcing banking and investment operations, as well as boosting non-oil commerce with foreign countries, are key sectors. It also entails boosting government spending on military defense, as well as product and ammunition manufacture.

Crown Prince Mohammed bin Salman revealed the first information on April 25, 2016. The Saudi Arabian Council of Ministers has charged the Council of Economic and Development Affairs (CEDA) with defining and monitoring the processes and actions necessary for the execution of “Saudi Arabia’s Vision 2030.”

Many of these chances are opening doors for real estate developers and construction businesses on the vision’s real estate mega projects, such as Neom future city, Qiddiya entertainment city, Diriyah Gate, Amaala, and the Red Sea Project.

Even though major project contracts have already been granted, it is apparent that the best is yet to come. Thousands of project packages are in the pipeline, ensuring that project expenditure and economic prospects be sustained for many years.