Evolution of modern Saudi Arabia and economic overview


Evolution of modern Saudi Arabia and economic overview

Saudi Arabia is the birthplace of Islam and home to Islam's two holiest shrines in Mecca and Medina. The king's official title is the Custodian of the Two Holy Mosques. The modern Saudi state was founded in 1932 by ABD AL-AZIZ bin Abd al-Rahman Al SAUD (Ibn Saud) after a 30-year campaign to unify most of the Arabian Peninsula. One of his male descendants rules the country today, as required by the country's 1992 Basic Law. 

Following Iraq's invasion of Kuwait in 1990, Saudi Arabia accepted the Kuwaiti royal family and 400,000 refugees while allowing Western and Arab troops to deploy on its soil for the liberation of Kuwait the following year. 

The continuing presence of foreign troops on Saudi soil after the liberation of Kuwait became a source of tension between the royal family and the public until all operational US troops left the country in 2003. Major terrorist attacks in May and November 2003 spurred a strong ongoing campaign against domestic terrorism and extremism.

From 2005 to 2015, King ABDALLAH incrementally modernized the Kingdom. Driven by personal ideology and political pragmatism, he introduced a series of social and economic initiatives, including expanding employment and social opportunities for women, attracting foreign investment, increasing the role of the private sector in the economy, and discouraging businesses from hiring foreign workers. 

Saudi Arabia saw some protests during the 2011 Arab Spring but not the level of bloodshed seen in protests elsewhere in the region. Shia Muslims in the Eastern Province protested primarily against the detention of political prisoners, endemic discrimination, and Bahraini and Saudi Government actions in Bahrain. Riyadh took a cautious but firm approach by arresting some protesters but releasing most of them quickly and by using its state-sponsored clerics to counter political and Islamist activism.

The government held its first-ever elections in 2005 and 2011, when Saudis went to the polls to elect municipal councilors. In December 2015, women were allowed to vote and stand as candidates for the first time in municipal council elections, with 19 women winning seats. King SALMAN bin Abd al-Aziz Al Saud ascended to the throne in 2015 and placed the first next-generation prince, MUHAMMAD BIN NAIF bin Abd al-Aziz Al Saud, in the line of succession as Crown Prince. He designated his son, MUHAMMAD BIN SALMAN bin Abd al-Aziz Al Saud, as the Deputy Crown Prince. In March 2015, Saudi Arabia led a coalition of 10 countries in a military campaign to restore the legitimate government of Yemen, which had been ousted by Huthi forces allied with former president ALI ABDULLAH al-Salih. 

The war in Yemen has drawn international criticism for civilian casualties and its effect on the country’s dire humanitarian situation. In December 2015, then Deputy Crown Prince MUHAMMAD BIN SALMAN announced Saudi Arabia would lead a 34-nation Islamic Coalition to fight terrorism (it has since grown to 41 nations). In May 2017, Saudi Arabia inaugurated the Global Center for Combatting Extremist Ideology (also known as "Etidal") as part of its ongoing efforts to counter violent extremism. 

In June 2017, King SALMAN elevated MUHAMMAD BIN SALMAN to Crown Prince. In September 2017, King SALMAN issued a royal decree recognizing the right of Saudi women to drive beginning in June 2018.

The country remains a leading producer of oil and natural gas and holds about 16% of the world's proven oil reserves as of 2015. The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the WTO in 2005, and promotes foreign investment in the Kingdom. 

In April 2016, the Saudi government announced a broad set of socio-economic reforms, known as Vision 2030. Low global oil prices throughout 2015 and 2016 significantly lowered Saudi Arabia’s governmental revenue. In response, the government cut subsidies on water, electricity, and gasoline; reduced government employee compensation packages; and announced limited new land taxes. In coordination with OPEC and some key non-OPEC countries, Saudi Arabia agreed cut oil output in early 2017 to regulate supply and help elevate global prices.

Economy - overview:

Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 16% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 87% of budget revenues, 42% of GDP, and 90% of export earnings.

Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Approximately 6 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors; at the same time, however, Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population.

In 2017, the Kingdom incurred a budget deficit estimated at 8.3% of GDP, which was financed by bond sales and drawing down reserves. Although the Kingdom can finance high deficits for several years by drawing down its considerable foreign assets or by borrowing, it has cut capital spending and reduced subsidies on electricity, water, and petroleum products and recently introduced a value-added tax of 5%. In January 2016, Crown Prince and Deputy Prime Minister MUHAMMAD BIN SALMAN announced that Saudi Arabia intends to list shares of its state-owned petroleum company, ARAMCO - another move to increase revenue and outside investment. The government has also looked at privatization and diversification of the economy more closely in the wake of a diminished oil market. 

Historically, Saudi Arabia has focused diversification efforts on power generation, telecommunications, natural gas exploration, and petrochemical sectors. More recently, the government has approached investors about expanding the role of the private sector in the health care, education and tourism industries. While Saudi Arabia has emphasized their goals of diversification for some time, current low oil prices may force the government to make more drastic changes ahead of their long-run timeline.

GDP (purchasing power parity):

$1.789 trillion (2017 est.)

$1.787 trillion (2016 est.)

$1.756 trillion (2015 est.)

note: data are in 2017 dollars

country comparison to the world: 16

GDP (official exchange rate):

$678.5 billion (2017 est.)

GDP - real growth rate:

0.1% (2017 est.)

1.7% (2016 est.)

4.1% (2015 est.)

country comparison to the world: 199

GDP - per capita (PPP):

$55,300 (2017 est.)

$56,300 (2016 est.)

$56,600 (2015 est.)

note: data are in 2017 dollars

country comparison to the world: 21

Gross national saving:

28.8% of GDP (2017 est.)

25.2% of GDP (2016 est.)

26.1% of GDP (2015 est.)

country comparison to the world: 31

GDP - composition, by end use:

household consumption: 41.3%

government consumption: 24.6%

investment in fixed capital: 24.4%

investment in inventories: 4.4%

exports of goods and services: 35.6%

imports of goods and services: -30.3% (2017 est.)

GDP - composition, by sector of origin:

agriculture: 2.6%

industry: 44.2%

services: 53.2% (2017 est.)

Agriculture - products:

wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk


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

Industrial production growth rate:

-0.3% (2017 est.)

country comparison to the world: 190

Labor force:

12.34 million

note: comprised of 3.1 million Saudis and 10.7 million non-Saudis (2017 est.)

country comparison to the world: 48

Labor force - by occupation:

agriculture: 6.7%

industry: 21.4%

services: 71.9% (2005 est.)

Unemployment rate:

5.8% (2017 est.)

5.6% (2016 est.)

note: data are for total population; unemployment among Saudi nationals is 12.8%

country comparison to the world: 78

Population below poverty line:


Household income or consumption by percentage share:

lowest 10%: NA%

highest 10%: NA%

Distribution of family income - Gini index:

45.9 (2013 est.)

country comparison to the world: 36


revenues: $171.6 billion

expenditures: $227.8 billion (2017 est.)

Taxes and other revenues:

25.3% of GDP (2017 est.)

country comparison to the world: 111

Budget surplus (+) or deficit (-):

-8.3% of GDP (2017 est.)

country comparison to the world: 200

Public debt:

30% of GDP (2017 est.)

22.3% of GDP (2016 est.)

country comparison to the world: 163

Fiscal year:

calendar year

Inflation rate (consumer prices):

-0.2% (2017 est.)

3.5% (2016 est.)

country comparison to the world: 7

Central bank discount rate:

2.5% (31 December 2008 est.)

country comparison to the world: 111

Commercial bank prime lending rate:

8.3% (31 December 2017 est.)

7.1% (31 December 2016 est.)

country comparison to the world: 103

Stock of narrow money:

$311.2 billion (31 December 2017 est.)

$305.2 billion (31 December 2016 est.)

country comparison to the world: 16

Stock of broad money:

$487.5 billion (31 December 2017 est.)

$476.6 billion (31 December 2016 est.)

country comparison to the world: 23

Stock of domestic credit:

$250.1 billion (31 December 2017 est.)

$221.3 billion (31 December 2016 est.)

country comparison to the world: 40

Market value of publicly traded shares:

$421.1 billion (31 December 2015 est.)

$483.1 billion (31 December 2014 est.)

$467.4 billion (31 December 2013 est.)

country comparison to the world: 24

Current account balance:

$4.322 billion (2017 est.)

$-27.54 billion (2016 est.)

country comparison to the world: 27


$231.3 billion (2017 est.)

$183.6 billion (2016 est.)

country comparison to the world: 22

Exports - commodities:

petroleum and petroleum products 90% (2012 est.)

Exports - partners:

China 13.6%, Japan 11.3%, India 10.7%, US 9.8%, South Korea 9.1%, Singapore 4.7% (2016)


$136.8 billion (2017 est.)

$127.8 billion (2016 est.)

country comparison to the world: 33

Imports - commodities:

machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles

Imports - partners:

China 16.2%, US 15%, Germany 6.3%, Japan 5.3%, UAE 5%, South Korea 4.3% (2016)

Reserves of foreign exchange and gold:

$509 billion (31 December 2017 est.)

$535.8 billion (31 December 2016 est.)

country comparison to the world: 5

Debt - external:

$212.9 billion (31 December 2017 est.)

$189.3 billion (31 December 2016 est.)

country comparison to the world: 36

Stock of direct foreign investment - at home:

$264.6 billion (31 December 2017 est.)

$258.1 billion (31 December 2016 est.)

country comparison to the world: 24

Stock of direct foreign investment - abroad:

$56.09 billion (31 December 2017 est.)

$46.45 billion (31 December 2016 est.)

country comparison to the world: 42

Exchange rates:

Saudi riyals (SAR) per US dollar -

3.75 (2017 est.)

3.75 (2016 est.)

3.75 (2015 est.)

3.75 (2014 est.)

3.75 (2013 est.)

Military expenditures:

9.85% of GDP (2016)

13.33% of GDP (2015)

10.68% of GDP (2014)

8.98% of GDP (2013)

7.68% of GDP (2012)

country comparison to the world: 3

Military branches:

Ministry of Defense: Royal Saudi Land Forces, Royal Saudi Naval Forces (includes Marine Forces and Special Forces), Royal Saudi Air Force (Al-Quwwat al-Jawwiya al-Malakiya as-Sa'udiya), Royal Saudi Air Defense Forces, Royal Saudi Strategic Rocket Forces, Ministry of the National Guard (SANG) (2015)

Military service age and obligation:

17 is the legal minimum age for voluntary military service; no conscription (2012)

Disputes - international:

Saudi Arabia has reinforced its concrete-filled security barrier along sections of the now fully demarcated border with Yemen to stem illegal cross-border activities; Kuwait and Saudi Arabia continue discussions on a maritime boundary with Iran; Saudi Arabia claims Egyptian-administered islands of Tiran and Sanafir

Refugees and internally displaced persons:

refugees (country of origin): 30,000 (Yemen) (2017)

stateless persons: 70,000 (2016); note - thousands of biduns (stateless Arabs) are descendants of nomadic tribes who were not officially registered when national borders were established, while others migrated to Saudi Arabia in search of jobs; some have temporary identification cards that must be renewed every five years, but their rights remain restricted; most Palestinians have only legal resident status; some naturalized Yemenis were made stateless after being stripped of their passports when Yemen backed Iraq in its invasion of Kuwait in 1990; Saudi women cannot pass their citizenship on to their children, so if they marry a non-national, their children risk statelessness

Trafficking in persons:

current situation: Saudi Arabia is a destination country for men and women subjected to forced labor and, to a lesser extent, forced prostitution; men and women from South and East Asia, the Middle East, and Africa who voluntarily travel to Saudi Arabia as domestic servants or low-skilled laborers subsequently face conditions of involuntary servitude, including nonpayment and withholding of passports; some migrant workers are forced to work indefinitely beyond the term of their contract because their employers will not grant them a required exit visa; female domestic workers are particularly vulnerable because of their isolation in private homes; women, primarily from Asian and African countries, are believed to be forced into prostitution in Saudi Arabia, while other foreign women were reportedly kidnapped and forced into prostitution after running away from abusive employers; children from South Asia, East Africa, and Yemen are subjected to forced labor as beggars and street vendors in Saudi Arabia, facilitated by criminal gangs

tier rating: Tier 2 Watch List - Saudi Arabia does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so; government officials and high-level religious leaders demonstrated greater political will to combat trafficking and publically acknowledged the problem – specifically forced labor; the government reported increased numbers of prosecutions and convictions of trafficking offenders; however, it did not proactively investigate and prosecute employers for potential labor trafficking crimes following their withholding of workers’ wages and passports, which are illegal; authorities did not systematically use formal criteria to proactively identify victims, resulting in some unidentified victims being arrested, detained, deported, and sometimes prosecuted; more victims were identified and referred to protective services in 2014 than the previous year, but victims of sex trafficking and male trafficking victims were not provided with shelter and remained vulnerable to punishment (2015)

Illicit drugs:

regularly enforces the death penalty for drug traffickers, with foreigners being convicted and executed disproportionately; improving anti-money-laundering legislation and enforcement

With all the challenges Saudi Arabia is still progressing well and their visionary leaders know their pivotal role to play in the comity of nations and specially in muslim world.

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