Saudi Arabia - Market OverviewSaudi Arabia - Market Overview
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Saudi Arabia is the largest country in the Gulf region with a population of 33 million, and the largest economy in the Arab World with a GDP of $ 782 billion. It is the only G-20-member country in the region. The Saudia Arabian Government (SAG) exercises control over main economic activities of the country’s oil-based economy. Saudi Arabia has almost 16 percent of the world's proven petroleum reserves, plays a principal role in OPEC, is one of the world’s largest producer and exporter of crude oil, and is a large-scale oil refiner and producer of natural gas. According to Forbes Magazine, petroleum accounts for roughly 87 percent of budget revenues, 32 percent of GDP, and 81 percent of export earnings.
To diversify its economy away from oil, in 2016, SAG launched a broad and ambitious socio-economic reform plan known as Vision 2030. The program is aimed at diversifying the economy, creating private sector jobs for a growing population, and placing government finances on a sounder footing. Vision 2030’s most significant goals and targets include: spurring private-sector growth; increasing local content requirements in manufacturing, particularly in defense equipment and basic materials; enhancing Saudi government efficiencies; improving the provision of government services; increasing revenue generation through new taxes; transforming the Public Investment Fund (PIF) into the world’s largest sovereign wealth fund; providing affordable housing to citizens; developing Saudi Arabia’s capital markets; building a renewable energy sector; attracting greater foreign direct investment; privatizing dozens of government entities; expanding the ICT sector; further developing the mining sector; accelerating the development of the public transportation and the railway network; building an effective domestic tourism infrastructure; and expanding natural gas and petrochemical production. To date, the SAG is not on pace to reach the Vision 2030 goals by 2030 but it is moving in a positive direction.
Saudi Arabia policies aimed at attracting new foreign investments were amplified at the Future Investment Initiative forum held in Riyadh in October of 2019. Three hundred global investment chiefs and policymakers attended. Saudi Arabia announced signing of $20 billion in investment deals during the event, including significant deals between Saudi and American companies.
In November 2019 Saudi Arabian- Oil Company (Aramco) announced its plan to list stock for public purchase for the first time in the company’s 86-year history. It plans to sell 1.5% of its outstanding shares. In 2018, Aramco made $111 billion dollars in profit, making it the most profitable company in the world (The second-most profitable company, Apple, made $60 billion that year). The oil giant announced the company could be valued at $1.7 trillion. Aramco’s procurements present numerous significant opportunities for U.S. suppliers in energy, construction, and security including cyber security. U.S. Commercial Service maintains an office in Dhahran in the oil-rich Eastern Province of Saudi Arabia, assisting U.S. exporters in their business dealings with Aramco.
Saudi Arabia is America’s 22nd-largest goods trading partner and the second-largest U.S. goods export market in the Gulf region behind the UAE. U.S. goods exports in 2018 totaled $$3.6 billion, (down 17 percent from 2017); U.S. imports from Saudi Arabia totaled $$24.1 billion, resulting in a goods trade deficit of $$10.5 billion. Major U.S. export products include: transportation equipment (including aircraft but excluding rail) ($$3.8 billion); nuclear machinery ($$1.9 billion), arms and ammunition ($$1.5 billion), electric machinery ($$1.1 billion); optic, photo, medical instruments ($$0.7 billion), chemicals ($500$ million), and cereals ($400 m$illion) . Source: Global Trade Atlas.
In 2017, U.S. exports of consumer-oriented food products to Saudi Arabia declined by approximately 11 percent to $$508 million. Saudi Arabia is the largest importer of food and agricultural products in the Gulf Cooperation Council (GCC). The latest available U.N. trade data show Saudi Arabia imported $$14.8 billion worth of agricultural and related products in 2016, a decline of approximately 23 percent from 2015. This decline was mostly due to lower prices of grains, such as corn, wheat, barley and rice, and lower imported quantities of dairy product and frozen broiler meat. In 2016, Saudi Arabia imported approximately $$7.8 billion of consumer-oriented food products, a 20 percent decrease from 2015. U.S. food products are generally viewed as meeting higher-quality standards compared to those produced locally or imported from other countries. Although U.S. food products command higher price prices compared to imports from Asia and Arab countries, demand for U.S. food products in the Saudi market has been increasing in the past few years. Source: USDA Report
Saudi Arabia Trade Development and Promotion