The accession of King Salman has been relatively smooth with little disruption to the Saudi economy. Saudi Arabia is the only Middle Eastern country among the G-20 members of industrialized states, and its GDP in 2014 exceeded USD 777 billion. The public sector dominates the Saudi economy with oil accounting for 45% of GDP and nearly 90% of government revenues. A nascent manufacturing sector accounts for less than 10% of GDP. Economists project a fiscal deficit of 13.3% of GDP due to lower oil revenues, the government’s rising salary bill and the costs related to military action in the region. There have been cuts in certain capital expenditure areas such as stadium construction and certain future Aramco petrochemical and refinery projects, though most projects currently underway are moving forward though some have been pared down in scope. Overall, there has not yet been a significant deterioration in the business climate resulting from lower oil prices. In fact, U.S. exports to Saudi Arabia are expected in 2015 to reach an all-time high of $19 billion. Furthermore, the September 2015 announcement by Saudi leadership of a “U.S.-Saudi Strategic Partnership for the 21st Century” lays out a plan for significant new projects over the next 10 years relying mostly on U.S. solutions and expertise.
The size and continued growth of the Saudi economy, the fact that the Saudi currency or riyal is pegged to the U.S. dollar (at 3.75 riyals per dollar), and the pro-American outlook of Saudi business circles, all make Saudi Arabia an indispensable partner for U.S. companies who are serious about doing business in the Middle East.
To download the latest edition of the “Country Commercial to Saudi Arabia,” please click here.