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Economic and political overview

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Saudi Arabia is the largest economy in the Middle East and the richest Arab country. The policy of large-scale public works undertaken by the authorities, as well as foreign direct investment and the soundness of the banking and financial system, have enabled the country to become the number one regional economy and one of the largest in the world. However, the economy of Saudi Arabia is almost entirely based on oil, with GDP growth being closely linked to real oil growth. In 2021, increasing oil prices and the stabilization of the COVID-19 pandemic contributed to a GDP growth of 3.2% (IMF Economic and Political Outlook, October 2022). The forecasts of the Ministry of Finance, the OECD and the IMF agree on a growth rate of 7.6% in 2023, before coming back to 3.7% in 2024.

High oil revenue weighed on Saudi Arabia's current account balance, with an estimated budgetary surplus of over USD 161.52 billion in 2022. Such surplus is likely to be narrowed down to USD 122.69 billion in 2023, and 103.94 billion in 2024 (IMF, 2023). The measure taken to curb the impact of COVID-19 on the private sector entailed an increase in public debt, which stood at 30% in 2021 but was pushed back to 24.8% in 2022. The debt-to-GDP ratio is expected to stabilised at 25.1% in 2023 and 24.6% in 2024 (IMF, 2023). Inflation picked up to 3.1% in 2021 partly as a consequence of the hike in the VAT rate from 5% to 15%, and then 2.7% in 2022. It should stabilize around 2% in the upcoming years (2.2% in 2023 and 2% in 2024).

The standard of living in Saudi Arabia is one of the highest in the Middle East, with a GDP per capita of over USD 27,941 (IMF, 2023). According to the latest data available from the Saudi General Authority for Statistics, unemployment in Saudi Arabia among citizens increased to 9.9% in the third quarter of 2022, up 0.2% from the previous quarter but the overall unemployment rate remained unchanged at 5.8%. Nevertheless, the unemployment rate is much higher for female citizens compared to the male population (22.3% vs. 6.1%).

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 734.27868.591,108.151,061.901,082.08
GDP (Constant Prices, Annual % Change) -4.33.98.73.13.1
GDP per Capita (USD) 20,97125,46431,85029,92229,893
General Government Gross Debt (in % of GDP) 31.028.822.623.623.1
Inflation Rate (%) 3.43.12.52.82.3
Unemployment Rate (% of the Labour Force) 7.76.70.00.00.0
Current Account (billions USD) -22.8144.32152.8466.0338.87
Current Account (in % of GDP) -3.15.113.86.23.6

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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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.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.4 24.8 72.8
Value Added (in % of GDP) 2.3 45.5 46.7
Value Added (Annual % Change) 2.6 1.7 4.7

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Saudi Riyal (SAR) - Average Annual Exchange Rate For 1 USD 3.753.753.753.803.75

Source: World Bank - Latest available data.

 

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Foreign Trade

Saudi Arabia was the 26th largest exporter of goods and the 32nd largest import market in the world in 2022, with foreign trade representing 59% of its GDP (World Bank, 2023). Petroleum products represent a large majority of exports, followed by petrochemical products (propylene, ethylene, etc.), covering around 78.6% of all exports in 2020. Machinery and electrical equipment account for the largest share of imports, followed by automobile, chemical and metal products.

Saudi Arabia's main export partners are the UAE, China, India, Egypt and The United States. The country’s imports come chiefly from China, the United States, UAE, India and Germany (data World Bank, 2023). In order to promote international trade, attract foreign investment and diversify the non-oil sectors, the government announced plans to establish four “economic cities” in different regions of the country, providing a variety of advantages to companies that choose to locate their operations within their limits.

The country's trade balance, although structurally in surplus, fluctuates depending on the price of oil and global demand. In 2021, exports totalled USD 276.17 billion against USD 152.85 billion of imports. In the same year, the Kingdom exported USD 9.7 billion worth of services, importing USD 62 billion (WTO, 2023). According to data from the General Authority for Statistics, overall merchandise exports increased by 59% in 2021 with the share of oil exports in total exports reaching 74.9%. The GDP Growth of the Non Oil Sector in Saudi Arabia decreased to 5.99 percent in the third quarter of 2022 from 8.19 percent in the second quarter of 2022 (World Bank latest data available).

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 134,519137,065153,163137,998152,850
Exports of Goods (million USD) 221,835294,373261,603173,854276,179
Imports of Services (million USD) 54,30555,08355,21938,20173,281
Exports of Services (million USD) 17,44719,85223,5299,63710,303

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 64.264.262.852.159.1
Trade Balance (million USD) 98,461168,749121,33647,944136,464
Trade Balance (Including Service) (million USD) 38,018105,32766,91966473,486
Imports of Goods and Services (Annual % Change) 0.32.69.6-19.83.3
Exports of Goods and Services (Annual % Change) -3.17.2-5.0-10.22.0
Imports of Goods and Services (in % of GDP) 29.325.727.225.924.3
Exports of Goods and Services (in % of GDP) 34.938.635.626.234.8

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) 23.36.56.15.35.4
Volume of imports of goods and services (Annual % change) 8.57.26.06.76.1

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Saudi Arabia is a member of the following international economic organisations: Arab Monetary Fund (AMF), ICC, Gulf Cooperation Council (GCC) G-20, G-77, IMF, Arab League, WTO, among others. For the full list of economic and other international organisations in which participates Saudi Arabia click here. International organisation membership of Saudi Arabia is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Saudi Arabia can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2021
United Arab Emirates 5.1%
China 3.8%
India 3.2%
Egypt 2.7%
United States 1.7%
See More Countries 83.4%
Main Suppliers
(% of Imports)		 2021
China 19.8%
United States 10.6%
United Arab Emirates 8.2%
India 5.3%
Germany 4.9%
See More Countries 51.2%

Source: Comtrade, Latest Available Data

 

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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.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Saudi Arabia, please visit the Saudi government’s Covid-19 Daily Updates with the official data. Furthermore, the portal of the Ministry of Health provides data on the geographical distribution of the epidemic in the country.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures

To find out about the latest public health situation in Saudi Arabia and the current sanitary measures in vigour, please consult the dedicated pages on the portal of the Saudi Center for Disease Prevention and Control. Furthermore, Ministry of Health provides up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), refer to the website of the Saudi Customs.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Saudi Arabia on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan

For information on the economic recovery scheme put in place by the Saudi government to address the impact of the COVID-19 pandemic on the Saudi economy, consult the website of the Ministry of Finance. Further details can be sourced on the dedicated page of KPMG's website.
For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Saudi government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Saudi Arabia in the IMF's Policy Tracker platform.
Support plan for businesses
For information on the local business support scheme established by the Saudi government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, the Ministry of Investment has formed a new taskforce: the MISA COVID-19 Response Center (MCRC). The Ministry also provides a “Guide to Business Continuity in Case of Emergency Coronavirus Covid-19”. Further details can be found on the dedicated page on KPMG's website.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters

For the up-to-date information on possible support plans for exporters in Saudi Arabia, if applicable, please consult the website of the Saudi Export Development Authority.

 

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