October 25th, 2018

Macroeconomics in the Kingdom of Saudi Arabia

In recent weeks, there have been a lot of news about the Kingdom of Saudi Arabia and the incidents surrounding the tragic disappearance of a Saudi journalist in Turkey. For those who might not be familiar with the economics of the Gulf Monarchy, this articles explores Saudi Arabia.

The Kingdom of Saudi Arabia has a total territory of 2.15 million square kilometers, which is larger than any individual state of the United States. Located on the Arabian Peninsula, the Kingdom has a total coastline of 2.640 kilometers along both the Persian Gulf and the Red Sea. Likewise, the national landscape is dominated by a dry desert and extreme temperatures. Currently, Saudi Arabia has a total population of almost 29 million citizens, with an average age of twenty-eight years. Furthermore, about 84% of the Saudi population lives in an urban setting, notably the capital city of Riyadh with some 7 million inhabitants.

Macroeconomics in the Kingdom of Saudi Arabia

The country’s national annual gross domestic product (GDP) is US$1.8 trillion (PPP), but the national economy has suffered from a period of slow and uneven growth in recent years. The Saudi economy is divided into 3% agriculture, 44% manufacturing, and 53% services. Meanwhile, the national labor force is divided into 7% working in the agriculture industry, 21% working in the industrial sector, and 72% working in services. Similarly, the national agriculture industry utilizes about 80% of the national territory, while another 1% is forested. In terms of natural resources, Saudi Arabia has petroleum, natural gas, iron ore, gold, and copper. Within manufacturing, the national industry is focused on oil production, petroleum refining, petrochemicals, ammonia, industrial gases, sodium hydroxide, cement, fertilizer, plastics, metals, commercial ship repair, and commercial aircraft repair. Simultaneously, the country’s agricultural industry has as main products wheat, barley, tomatoes, melons, dates, citrus, mutton, chickens, eggs, and milk.

In terms of trade, Saudi Arabia world’s 27th largest export economy. During 2016, the country imported US$131 billion worth of goods and exported US$163 billion, resulting in a trade surplus of US$32 billion. Furthermore, that same year, Saudi Arabia’s main export, representing 59% or US$96 billion of the country’s total, was crude petroleum. On the other hand, the country’s main import, representing 9% or US$12 billion of all international purchases, were cars. Meanwhile, the Kingdom’s main trading partners are China, Japan, India, the United States, and the European Union, amongst others.

Unfortunately, in spite of its immense wealth, about 1.8 million people in Saudi Arabia suffer from undernourishment. Moreover, in recent years, the average per capita protein intake of animal origin amongst the Saudi population has been 39 grams daily. Simultaneously, land distribution in the country has evolved throughout the last half century. Back in 1961, permanent pastures and meadows in Saudi Arabia covered 85 million hectares, while arable land covered 1.14 million hectares and permanent crops covered 30.000 hectares. More recently, by 2016, permanent pastures and meadows had increased to cover 170 million hectares, while arable land represented 3.47 million hectares and permanent crops accounted for 142.000 hectares.

(Read more about Colombian Macroeconomics and Key Industries)

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