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Economic Overview

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. After the sustained growth recorded in 2022 (+8.7%) due to high oil prices, GDP decelerated to 0.8% in 2023 amid unfavourable base effect, reductions in oil production (-7%), and decreased energy prices. Increasing investment and private consumption should be the main drivers in 2024, with the IMF forecasting a growth rate of 4%, with a further uptick to 4.2% the following year.

In 2023, Saudi Arabia reported a budget deficit instead of the previously anticipated surplus, primarily attributed to "expansionary" spending strategies and "conservative revenue estimates." The government anticipates a budget deficit of 1.9% of GDP in 2024, followed by 1.6% in 2025, and 2.3% in 2026. Total expenditure rose to SAR 1.262 billion in 2023, from an earlier estimate of SAR 1.114 billion, and should slow down marginally to SAR 1.251 billion in 2024. The government aims to maintain fiscal discipline by reducing subsidy spending and capital expenditure, leveraging the sovereign wealth fund. Nevertheless, addressing the public wage bill, which constitutes approximately 40-45% of total fiscal expenditures, will be crucial in reducing the budget deficit. According to official figures, as of December 2023, Saudi Arabia's total outstanding direct indebtedness stood at SAR 1,050.3 billion (equivalent to USD 280.1 billion), consisting of SAR 644.4 billion (USD 171.8 billion) in domestic indebtedness and SAR 405.9 billion (USD 108.2 billion) in external indebtedness. The IMF estimated the overall debt-to-GDP ratio at 24.1% in 2023, with an expected decrease to 20.7% by 2025. Meanwhile, inflation inched down to 2.5% but it still  hovered above the 2010-2022 average of 2% on the back of robust demand for housing and tourism inflows.

The standard of living in Saudi Arabia is one of the highest in the Middle East, with a GDP per capita (PPP) of USD 68,453  (IMF, 2023). According to the latest data available from the Saudi General Authority for Statistics, unemployment among Saudis rose to 8.6% in the third quarter of 2023, compared to 8.3% in the second quarter of the year, while the overall unemployment rate stood at 5.1%.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 1,108.151,069.441,109.511,150.511,188.13
GDP (Constant Prices, Annual % Change) 8.70.84.04.23.3
GDP per Capita (USD) 34,44132,58633,14433,69534,115
General Government Gross Debt (in % of GDP) 23.824.122.420.719.2
Inflation Rate (%) n/a2.52.22.02.0
Unemployment Rate (% of the Labour Force) 5.60.00.00.00.0
Current Account (billions USD) 150.7563.5959.8650.7636.10
Current Account (in % of GDP) 13.65.95.44.43.0

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 2.4% 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. According to official figures, the agricultural contribution to GDP amounted to about USD 19.37 billion in 2022. In the last five years, organic food farming increased by 18% to 52.800 tons.

The industrial sector represents 53.2% of the GDP and employs 20% 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 90% 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 14% of GDP). According to the General Authority for Statistics, after growing in the first four months of 2023, the industrial production index decreased for seven consecutive months between May and November.

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. Despite facing tighter liquidity, Saudi banks are expected to maintain healthy performance metrics in 2023, thanks to the favorable operating conditions that will sustain profitability. In 2022, the average operating profit to risk-weighted assets ratio for Fitch-rated Saudi banks stood at 2.7%.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.7 20.0 77.3
Value Added (in % of GDP) 2.4 53.3 39.2
Value Added (Annual % Change) 3.9 12.8 4.3

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 21st-largest exporter of goods and the 32nd-largest import market in the world in 2022, with foreign trade representing 64% of its GDP (World Bank, latest data available). Petroleum products represent a large majority of exports, covering around 79.5% of all exports in 2022. The main non-oil export items included "chemical and allied industry products", comprising 35.8% of non-oil merchandise exports, and "plastics and associated articles; rubber and related articles" which constituted 28.3% of non-oil merchandise exports. The most important imported merchandise goods were "machinery and mechanical appliances; electrical equipment; parts thereof" (19.4% of total merchandise imports), and "transport equipment and parts thereof" (14.5% - data General Authority for Statistics).

During 2022, exports to China totaled SAR 249.9 billion, constituting 16.2% of the total exports, thereby establishing China as the primary destination for Saudi Arabia's exports. Following closely were India and Japan, with SAR 157.2 billion (10.2% of total exports) and SAR 152.9 billion (9.9%), respectively. South Korea, the USA, the United Arab Emirates, Egypt, Taiwan, Singapore, and Bahrain rounded out the top 10 destinations for Saudi exports. China was also the main import partner (21%), followed by the
 U.S. (9.1%) and United Arab Emirates (6.3%). India, Germany, Japan, Egypt, South Korea, Italy and Switzerland were the other countries that ranked in the top 10 countries for imports (data General Authority for Statistics). 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 2022, exports totalled USD 411.1 billion (with oil exports increasing by 61.8% y-o-y) against USD 189.8 billion in imports. In the same year, the Kingdom exported USD 31.8 billion worth of services, importing USD 82.8 billion (WTO). The overall trade balance was estimated to be positive by 16.9% of GDP by the World Bank. According to data from the General Authority for Statistics, overall merchandise exports stood at SAR 904.9 billion, whereas imports reached SAR 565.3 billion (-24.2% and +9.5% year-on-year, respectively).

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 153,163137,997152,849189,877211,028
Exports of Goods (million USD) 261,603173,854276,179411,184322,256
Imports of Services (million USD) 78,66056,26473,78182,29196,242
Exports of Services (million USD) 24,2438,98410,30334,66851,932

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

Foreign Trade Indicators 20182019202020212022
Foreign Trade (in % of GDP) 62.060.249.757.563.1
Trade Balance (million USD) 168,749121,33647,944136,464234,688
Trade Balance (Including Service) (million USD) 105,32766,91966473,486183,780
Imports of Goods and Services (Annual % Change) 2.69.6-19.78.312.0
Exports of Goods and Services (Annual % Change) 7.2-5.0-10.61.018.7
Imports of Goods and Services (in % of GDP) 24.826.124.824.523.2
Exports of Goods and Services (in % of GDP) 37.234.124.933.039.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change) 1.36.57.76.06.5
Volume of imports of goods and services (Annual % change) 8.74.66.96.25.9

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
Crown Prince and Prime Minister: Muhammad bin Salman bin Abd al-Aziz Al Saud (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. 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.
In early 2023, Iran and Saudi Arabia, despite their historical regional rivalry, initiated a reconciliation brokered by China. While this move signals a positive step toward regional stability, both nations will maintain distinct geopolitical and religious agendas, suggesting that full reconciliation may occur gradually. Additionally, Saudi Arabia's ties with China, a significant purchaser of its oil and provider of essential capital goods, are anticipated to strengthen. While these dynamics may pose challenges to relations with Israel and the U.S., the latter remains a steadfast ally to Saudi Arabia, particularly in security matters, while progress in relations with Israel was hindered by the outbreak of the conflict with Hamas.
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

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available 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 is available 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) undertaken 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 an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, 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.

 

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