Economy
From The Report: Saudi Arabia 2013
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Saudi Arabia continues to post strong economic growth on the back of its thriving petroleum sector anchored by a steady political and financial base. One of the largest exporters of oil worldwide, the country has also had some of the highest economic growth rates. Real GDP growth was forecast at 6.8% for 2012, following 8.5% expansion in 2011 and 4.8% in 2010. However, a new wave of strong state expenditures has spread revenues across a wide array of economic subsectors. As a result, the government has been able to accelerate its long-term strategic goal of economic diversification away from oil as well as address key social issues like education, employment and the availability of affordable housing. Looking ahead, the state’s continued investments in both infrastructure and social services should continue to fuel domestic growth, particularly in the private sector.

This chapter includes interviews with Zafer Çağlayan, Turkey’s Minister of Economy; Karel De Gucht, EU Trade Commissioner; and Muhammad Al Jasser, Minister of Economy and Planning.

Articles from this Chapter

Overview

Building momentum: Hydrocarbons provide funding for further diversification
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Flying in the face of ongoing global economic malaise which has seen many Western economies struggling to regain their composure, Saudi Arabia continues to post strong economic growth on the back of its thriving petroleum sector anchored by a steady political and financial base. Although higher-than-expected oil demand played a major role in producing a record budget surplus in 2012, a new wave of strong state expenditures has spread these revenues across a wide array of economic subsectors. As a…

Interview

OBG talks to Karel De Gucht, EU Trade Commissioner
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Interview: Karel De Gucht What has been the biggest hurdle in the negotiations of a GCC-EU Free Trade Area? When do you expect the process to be concluded? KAREL DE GUCHT: The EU is committed to deepening its trade relationship with the Gulf region. We relaunched negotiations on the EU-GCC Free Trade Agreement (FTA) in 2002 with the goal of reinforcing this new regional market and bringing it closer to the EU. Since 2007, we have been very close to concluding an agreement that will not only be…

Analysis

Going local: The government is trying new strategies to get more nationals into the workforce
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For all its economic success, its public works projects, forests of new economic cities rising from the desert and concerted efforts to infuse new resources into all levels of education, Saudi Arabia has yet to turn the corner on the its long-standing dilemma of how to get greater numbers of nationals into the workforce. For the past decade unemployment among nationals has continued to hover stubbornly in the double digits, in spite of rising GDP and ongoing efforts to create new work opportunities…

Analysis

New prospects: As slow growth continues in many parts of the world, the stock exchange could see increased interest
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With the spectre of the global economic slowdown still looming over advanced economies, investors weary of waiting for the long anticipated financial rebound might do well to look to emerging markets for potentially attractive yields. Four years on from the credit crisis, advanced economies are still lagging behind global economic growth, which registered a pedestrian 3.3% rate of expansion in 2012 and is expected to increase marginally to 3.6% in 2013, according to IMF projections. The US and Japan…

Interview

OBG talks to Muhammad Al Jasser, Minister of Economy and Planning
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Interview: Muhammad Al Jasser What do you believe is the single most important challenge facing the economy in the next decade and how should it be dealt with? MUHAMMAD AL JASSER: A sustainable, prosperous and diversified economy requires a future dominated by high-skill, high-wage sectors, as opposed to the current low-skill, low-wage activities that make up many sectors of our economy today. To do this and maintain a competitive edge, we need a highly productive labour force with adequate education,…

Analysis

Home sweet home: Reforms to the mortgage law and a major supply shortfall are set to transform the sector
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Restricted by regulatory uncertainty and underdevelopment over the past two decades, the Saudi Arabian real estate market is poised for a breakout in the coming years as long-awaited mortgage law reforms and more than a million new units planned for construction look set to transform the domestic market. Growing Demand A rapidly expanding population has driven strong demand in recent years. The Kingdom’s population has roughly doubled over the past two decades from 15.2m in 1990 to 29.2m in 2012,…

Analysis

Increased security: Defence offsets programme helps to create local benefits
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Looking to safeguard the county’s security in a tumultuous region, Saudi Arabia’s spending on defence continually ranks among the highest components of the country’s annual budget. While military expenditures as a proportion of the entire budget has fallen in recent years, defence and security spending accounted for 30.8% of the total 2012 budget and 31% of the 2011 budget, according to data from the Saudi Arabian Monetary Agency. Although these marked the lowest proportion of spending since…

Analysis

Progress report: New plans for the budget are focusing on a variety of sectors
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With Saudi Arabia’s recent budget providing the financial fuel for the country’s economic expansion and diversification, the government’s ninth development plan (NDP) 2010-14 provides the roadmap. The most recently updated version of the plan divides SR1.4trn ($373.1bn) among five development sectors. Developed by the Saudi Ministry of Economy and Planning, the development plan incorporates various long-range strategies and goals into five themes: improving citizens’ standard of living and…

Analysis

Sovereign wealth: The country’s wealth funds now include more diverse investments
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With the Kingdom’s coffers enjoying the fruits of high hydrocarbons prices, the state is looking to ensure that today’s good fortune is passed on to future generations. Traditionally managed by the Saudi Arabian Monetary Agency (SAMA) and the Ministry of Finance, the country’s stewardship of these wealth funds is now being expanded to include new, more diverse national investment vehicles. While Saudi Arabia’s first official oil-dedicated sovereign wealth fund (SWF), the Sanabil Al Saudia…

Analysis

Starting small: Small business is central to diversifying the domestic economy
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A key component of Saudi Arabia’s continued economic diversification strategy calls for strengthening the role of the most prolific segment of the private sector – small and medium-sized enterprises (SMEs). Already growing at a healthy rate, SMEs can provide valuable employment opportunities for a rapidly growing and young population, improve productivity and help broaden the economy. As of 2012, SMEs accounted for one-quarter of the country’s GDP, provided 63% all of employment and made up…