Saudi Arabia: System
Essentials Chapter 3: Persian Gulf, Arabian Peninsula
Saudi Arabia: System
Essentials
Economy
/ Oil / Industry / Agriculture
/ Trade
Overview
/ Leadership / Infrastructure
/ Population / Fielded Forces
/ Table of Contents
Water tower, Buraydah, Al Qasim
Through five-year development plans, the government has sought to allocate its petroleum income to transform its relatively undeveloped, oil-based economy into that of a modern industrial state while maintaining the kingdom's traditional Islamic values and customers. Although economic planners have not achieved all their goals, the economy has progressed rapidly, and the standard of living of most Saudis has improved significantly. Dependence on petroleum revenue continues, but industry and agriculture now account for a larger share of economic activity. A shortage of skilled Saudi workers at all levels remains the principal obstacle to economic diversification and development. For the 1990s the government intends to bring its budget, which has been in deficit since 1983, back into balance, and to encourage private economic activity.
Saudi Arabia has the largest reserves of petroleum in the world, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 75% of budget revenues, 35% of GDP, and almost all export earnings. Proven oil reserves are estimated at more than 260 billion barrels--about one-quarter of world oil reserves. More than 95% of all Saudi oil is produced on behalf of the Saudi Government by Saudi ARAMCO. ARAMCO is the world's largest fully integrated oil company, encompassing all aspects of oil production from extraction to refining to marketing. Most Saudi oil exports move by tanker from terminals at Ras Tanura and Ju'Aymah. The remaining oil exports are transported via the east-west pipeline across the kingdom to the Red Sea port of Yanbu.
Including manufacturing, utilities, and construction, Saudi Arabia's industrial sector accounted for 21 percent of the GDP in 1990. Government-funded industrial capacity grew sharply in 1980s. Major non-oil refining industries concentrated in petrochemical and chemicals sector. In the early 1990s, the private sector has concentrated on developing domestic light manufacturing capability. Petrochemical production capacity is slated to increase 40 percent by 1995 as compared with 1990 output. Oil-fueled thermal power stations generate all of the country's electrical energy.
After a decade of massive government incentives, the agricultural sector accounted for about 6% percent of the GDP in 1991, up from under 1 percent of GDP in 1982. Rapid growth in agricultural output has led to some food self-sufficiency (particularly food grains) but has also caused depletion of scarce underground water resources.
Total exports decreased slightly from $51.7 billion in 1991 to an estimated $42.3 billion in 1993. Crude oil exports have historically accounted for almost all of Saudi Arabian exports, but since the 1980s exports of chemicals and other manufactured goods have grown to just under $2 billion per annum.
Total imports rose rapidly in early 1990s spurred by domestic investment boom. Imports have decreased slightly in the early 1990s from $34.6 billion in 1991 to $26 billion in 1993 and are sharply down from the early 1980s oil-boom period. Major imports include consumer goods, industrial inputs, and transport items. Military imports are not included in these figures.