Saudi Arabia: Economic and Political Outline

Economic Overview

The economy of Saudi Arabia is entirely based on oil. The policy of large-scale public works undertaken by the government, 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. After the global economic recession of 2008-2009, the recovery in domestic demand in 2010 helped stabilize growth; this was consolidated in 2011 (6%).

The government's priority is to maintain growth and living standards, and create jobs in an uncertain global and regional environment marked by social unrest. The government is developing the oil and gas industry while seeking to reduce dependency of the kingdom on oil, diversifying its economic activities and developing mainly agriculture (notably through the purchase of land abroad to cultivate certain essential goods), food and industry. The private sector development is encouraged (especially in services), but in terms of the wave of social unrest which has recently swept through the region, social spending has been increased and jobs have been created in the public sector.

The standard of living is one of the highest in the region with over USD 20,000 GDP/inhabitant. The country is still marked by an unemployment rate of about 11% and high degree of social inequality.

Main Sectors of Industry

Agriculture accounts for 3% of the GDP and employs 15% of the active population. It is not a very productive sector despite the huge state investments. Saudi Arabia imports most of its agricultural and food product requirements because of the geographical and climatic contraints (droughts). Water scarcity is a serious regional problem that the country is likely to face in the coming years, as growing cultivation of wheat presents a strong threat of water depletion.

The industrial sector represents two thirds of the GDP. 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 more than 90% of exports and nearly 80% of government revenues. The share of non-oil industrial sector is now growing because of the investments of the Saudi state for economic diversification.

Lastly, services represent 22% of the GDP. This sector is mainly dominated by tourism, financial and insurance services and the banking sector. Tourism generates very large revenues (almost 4 milions of tourists per year), exclusively thanks to the pilgrimage to Mecca.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

66.2/100

Position:

Moderately free

World Rank:

50/179

Regional Rank:

7/17

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Ministry of Finance
Ministry of Economy and Planning
Ministry of Petroleum and Mineral Resources
Ministry of Commerce and Industry
Ministry of Agriculture and Water

Statistical Office

Central Department of Statistics and Information

Central Bank

The Saudi Arabian Monetary Agency (SAMA)

Stock Exchange

Saudi Stock Exchange (Tadawul)

Other Useful Resources

Capital Market Authority
King Faisal Foundation

Main Online Newspapers

List of Saudi Newspapers
List of Arabic newspapers

Economic Portals

Economy watch

Political Outline

Type of State

Saudi Arabia is an absolute monarchy where the King has supreme powers.

Executive Power

King is both the chief of the state and head of the government. The monarch is hereditary. 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. A Consultative Council was appointed in August 1993 which has 120 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 meaningful way. The population of Saudia Arabia has limited political rights.

Main Political Parties

No political parties are allowed in Saudi Arabia. However, a party called Green Party of Saudi Arabia, which promotes the values of the worldwide Green movement, exists as an illegal organization. The first Saudi Arabian municipal elections were held in the year 2005.

Current Political Leaders

King and Prime Minister: Abd Allah ibn `Abd al-`Aziz Al Faysal Al Sa`ud (since August 2005) - hereditary.
Heir Apparent: Crown Prince SULTAN bin Abd al- Aziz Al Saud - half brother of the King.

Next Election Dates

Municipal elections, scheduled for 2009, has been postponed indefinitely.

Indicator of Freedom of the Press

World Rank:

158/179

Evolution:

1 place down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).