Economy of Saudi Arabia
Oil-dependent economy with vast reserves and state control.
Saudi Arabia has a high-income developing economy that is heavily reliant on its petroleum sector. Oil and gas account for approximately 22.3% of Saudi GDP and 55% of government revenue, with substantial fluctuations depending on oil prices each year. The kingdom has the second-largest proven petroleum reserves and the fourth-largest measured natural gas reserves, and it is currently the largest exporter of petroleum in the world. Other major parts of the economy include refining and chemical manufacturing from the oil reserves, much of which is vertically integrated in the state-owned enterprise, Saudi Aramco. Saudi Arabia is a founding member of the OPEC cartel.
- type
- National economy
- key_sectors
- Petroleum, refining, chemicals
- oil_share_of_GDP
- 42%
- oil_share_of_budget_revenues
- 87%
- oil_share_of_export_earnings
- 90%
- state_owned_enterprise
- Saudi Aramco
- currency_peg
- Saudi riyal fixed to U.S. dollar
Lore & Background
Saudi Arabia was a subsistence economy until the 1930s. The development of oil fields continued, managed mainly by Arabian American Oil Company (Aramco).
Reader's Guide
The Saudi economy is defined by its overwhelming dependence on petroleum, which accounts for roughly 87% of budget revenues, 90% of export earnings, and 42% of GDP. The state-owned Saudi Aramco manages the kingdom's oil reserves and production, which are the second-largest in the world. The economy experienced dramatic booms and busts tied to oil prices, such as the 1973 oil crisis and the 1980s oil glut, when production fell 80% and budget deficits emerged. The private sector contributes about 40% of GDP, and the government has encouraged its growth to create jobs for a swelling population. The economy is also characterized by a fixed exchange rate to the U.S. dollar and extensive ties between major businesses and the Saudi state.
Did You Know?
- Saudi Arabia has the second-largest proven petroleum reserves in the world, after Venezuela.
- The petroleum sector accounts for roughly 87% of Saudi budget revenues and 90% of export earnings.
- Saudi Arabia was a subsistence economy until the 1930s, when an oil concession was signed with Standard Oil Company of California.
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