Main Sectors of Industry

Agriculture accounts for 2.3% of Saudi Arabia’s GDP and employs 2% of the active population (World Bank, latest data available). Because of geographical and climatic constraints (droughts), Saudi Arabia imports most of its agricultural and food product requirements. Water scarcity is a serious regional problem that the country is likely to face in the coming years, as the growing cultivation of wheat presents the threat of water depletion. Saudi Arabia is the largest market for agriculture in the GCC region; however, productivity remains limited compared with the public investment that funds the sector.

The industrial sector represents 45.5% of the GDP and employs 25% of the workforce. It is dominated by non-manufacturing activities (oil drilling). The country has the largest oil reserves in the world and is also the largest producer and exporter of oil in the world. Oil accounts for nearly 87% of exports and 70% of government revenues (and more than 40% of GDP). The share of the non-oil industrial sector has been increasing along with the economic diversification efforts of the Saudi authorities (although manufacturing currently represents only 13,1% of GDP).

Lastly, services represent 52.2% of the GDP and employ 73% of the active population. This sector is mainly dominated by tourism, financial and banking services and the insurance sector. Tourism generates very high revenues (almost 4 million tourists per year), due in particular to the Hajj, the pilgrimage to Mecca that takes place in the last month of the Islamic year, that all Muslims are expected to make at least once during their lifetime. The Saudi government launched the “Financial Sector Development Program”, aimed at enabling financial institutions to support the growth of the private sector, develop an advanced capital market and improve financial planning.

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.

Source: World Bank - Latest available data.

Political Outline

Current Political Leaders

King: Salman bin Abdulaziz al-Saud (since January 2015) - hereditary; the monarch is both chief of state and head of government
Prime Minister: Mohammed bin Salman (since 27 September 2022)

Next Election Dates

None; the monarchy is hereditary

Current Political Context

Saudi King Salman bin Abdulaziz Al Saud has appointed Crown Prince Mohammed bin Salman Al Saud as prime minister in September 2022, a post historically held by the ruling monarch. The move, which comes as part of a wider cabinet reshuffle, confirms the growing power of Crown Prince Mohammed bin Salman Al Saud amid the transfer of further responsibilities from the King to his son. The transition of power is now well underway as is Mohammed bin Salman Al Saud programme to modernise and diversify the economy, even if the surging oil prices may remove some of the urgency. His position as prime minister formally makes him head of government, but he is already serving as the de facto ruler of Saudi Arabia as he oversees crucial economic and defence portfolios. He will likely consolidate his power even further before succeeding his father as King. Even though Riyadh has previously denied the possibility of the ailing King Salman abdicating the throne in favor of his son, such a scenario is more likely now that Mohammed bin Salman Al Saud is head of government.

In 2023 and the coming years, the Kingdom will navigate between the global powers and use its financial power to cultivate new alliances, partly to drive its diversification plans away from hydrocarbons to expand into new areas of manufacturing and other industries.

Main Political Parties

There are no political parties. However, certain political movements may exist (Islamists, Communists, Liberals, Greens, etc.), in the form of illegal organizations. The first municipal elections in Saudi Arabia took place in 2005.

Executive Power

The King is both the Chief of State and the head of the Government. The monarchy is hereditary. The 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 at the national level (although there are municipal elections). A Consultative Council was appointed in August 1993 which has 150 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 concrete way.