kingdom of Saudi arabia Ministry of Foreign Affairs Eye on The Kingdom Investment and Tourism Economy Overview Last updated: 11/7/2016 12:20 PM Page Image Image Caption Page ContentOver the past three decades (1970 - 2000), the Saudi economy has witnessed a considerable transformation in economic, social and urban aspects of life. The transformation was brought about by extensive government investments within the framework of five-year development plans to lay down the social and physical infrastructure of the country. This included the construction of massive road networks, bridges, dams, airports, seaports and marine terminals, electricity, desalination plants and communications systems. Substantial funds were also spent on education, health and vocational training programs as well as on projects involving the building of schools, colleges, universities, and general and specialized hospitals for the civilian and military sectors. In the industrial sector, huge funds were invested in establishing industrial estates in major cities, including the two advanced industrial towns of Jubail and Yanbu. These were designed to accommodate heavy industries such as the basic petrochemical projects, the iron and steel plants and the giant oil refineries set-up by the government in partnership with international corporations and the Saudi private sector. An extensive pipeline network crossing the Kingdom's Eastern, Central and Western regions has been constructed to transfer crude oil and gas to the oil refineries and petrochemical plants in Jubail and Yanbu as well as to the marine terminals in the two industrial towns for exporting oil and gas products overseas. for more information about investment in Saudi Arabia please visit the Saudi Arabian General Investment Authority on the link: http://www.sagia.gov.saDevelopment efforts brought remarkable changes in the structure of the Saudi economy during the past three decades as indicated below: - Gross domestic product (GDP) at constant 1994 prices recorded an average annual growth rate of 4.7 percent during the period 1970 - 2000. - The oil sector, including the still limited activities in the areas of mining and quarrying, registered an average annual growth rate of about 4.1 percent during the period. Its average share in total GDP, however, declined to between 29.0 and 32.0 percent during the Sixth Development Plan against 55.5 percent in the First Development Plan. The fall signified an expansion in non-oil activity and further diversification of the economy. - Non-oil GDP recorded a higher average annual growth rate of 5.8 percent. Its average share in total GDP has gone up from around 45.0 percent during the first plan to around 68.0 percent during the sixth plan. - The private sector registered an average annual growth rate of about 6.0 percent, and its average share in non-oil GDP has risen to about 73.0 percent while the average share of the government sector was close to 27.0 percent. - The average Saudi per capita income has grown six and a half-fold over this period from about SR 3,750 to about SR 24.150. - The size of the Saudi labor force is estimated to have risen from 1.2 million in 1969 to 3.2 million in 1999, increasing by an average annual rate of about 3.3 percent. - The number of expatriate manpower is estimated to have risen from 0.5 million in 1975 to about 4.0 million in 1999, representing about 55.5 percent of the total labor force. - Student enrollment (male and female) at various educational institutions increased from 0.6 million in 1969 to about 4.7 million in 1999, denoting an average annual growth rate of 7.0 percent. The performance of the Saudi economy was affected by the global economic slowdown especially in industrial countries, during 2001, which curtailed demand for oil and, in turn, reduced its prices by 14.0 percent. The average price of the Arabian Light crude went down from $ 26.8 a barrel in 2000 to $ 23.1 a barrel in 2001*. The value of oil exports fell by 8.8 percent. This adversely affected the Kingdom's budget which recorded a deficit of SR 27 billion. Although oil prices and production went down in 2001, the Saudi economy witnessed notable positive developments. These included lower inflation rate, continued rise in the growth of non-oil private sector, more efficient performance of the banking sector in conformity with international standards and continued structural and regulatory reforms and an enhanced privatization program. The Saudi economy continued to make notable progress during 1422/23 (2002). The gross domestic product maintained its uptrend. The current account of the balance of payments was in surplus for the fourth consecutive year. The domestic price situation continued to be characterized by marked stability. Money supply expanded at an accelerated rate along with a high growth rate in the non-oil private sector. The banking sector witnessed continuous progress, maintaining high efficiency rates in conformity with international standards. The privatization process and economic restructuring of several areas of economic and social activities continued during the year. Preliminary data of the Central Department of Statistics indicate that GDP (at current prices), excluding import duties, recorded a growth rate of 2.8 percent to SR 698.5 billion ($ 188.2 billion) in 2002. The non-oil sector GDP grew by 3.1 percent to SR 436.7 billion ($ 116.5 billion), constituting 62.5 percent of GDP. The non-oil private sector GDP went up by 4.0 percent to SR 286.1 billion ($ 76.3 billion) while that of the government sector rose by 1.4 percent to SR 150.6 billion ($ 40.2 billion). The oil sector GDP increased by 2.5 percent in 2002 compared to a decrease of 11.6 percent in 2001. During 1422/23 (2002), the banking system has continued to perform well according to international standards, reflecting its strength and soundness. As for technological developments, banks raised the number of their automated teller machines (ATMs), point of sale terminals (POS) and ATM cards, reinforcing banking awareness among the public and contributing to the decline in the use of currency to 13.8 percent of the total money supply. The 3-month interest rates on domestic currency deposits also fell to their lowest rate of 2.23 percent. The robust growth in the private sector has been accompanied by a number of factors that have enhanced confidence in the national economy and should continue to have a positive impact on private sector growth. Among these factors are the sovereign credit rating by Standard & Poor's to the Kingdom (with A+ long-term local currency and A long-term foreign currency grades), the custom union among the GCC countries, the signed and upcoming agreements on natural gas exploration, private sector involvement in the power and water projects, and the IPO of part of the Saudi Telecommunication Company's (STC) shares. The table of key economic indicators shows selected economic and social indicators of developments in the Saudi economy during 2002 as compared with 2001. These show a rise of 3 percent in population, an increase of 1.37 percent in labor force, a decline of 2.86 percent in GDP at current prices and a rise of 15.2 percent in money supply. GDP BY ECONOMIC ACTIVITY (At current prices): (Billion $) 1997199819992000200120021- Agriculture (including fishing & forestry8.919.049.189.339.529.632- Mining and quarrying - Oil & Natural Gas53.5834.5346.1669.2960.7062.07 - Other Quarrying Mining activities0.620.640.660.680.700.733- Manufacturing industry - Oil Refineries5.294.154.815.625.165.38 - Other Manufacturing Industries11.3311.3411.9412.5913.2914.054- Utilities (electricity, gas & water)2.022.102.182.272.382.505- Construction10.4110.7510.5211.1311.5211.976- Wholesale & Retail Trade, Hotels & Restaurants10.3111.3012.2612.7613.2813.857- Transportation, Storage & Telco6.967.157.447.768.158.548- Financial Services, Insurance, Real Estate & Business Services - Housing Property11.3110.8711.2611.4811.7212.00 - Other7.677.848.438.849.329.859- Services: Social & Personal5.455.565.705.916.156.4310- Minus Banking Services2.903.073.293.563.733.92Sub-Total (1-10)130.98112.19127.24154.10148.15153.0611- Administration, Defense Other govt. Services31.3730.9131.1431.7732.9633.20Sub-Total (1-11)162.35143.10158.39185.87181.11186.26Excise Duties2.432.672.572.571.901.97Total GDP164.77145.77160.96188.44183.01188.23 Source: Saudi Arabian Monetary Agency (SAMA), Thirty-Ninth Annual Report 2003G.