The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 1 
 
 
I. ECONOMIC ENVIRONMENT 
(1) MAJOR FEATURES OF THE ECONOMY  
1. The Kingdom of Saudi Arabia (Saudi Arabia) is the world's largest exporter of oil and one of 
the biggest producers of oil and natural gas (Chapter IV(2)).  In 2010, 23.1% of real GDP1, some 91% 
of government income, and 86% of export earnings  were based on hydrocarbons.  Other mining and 
quarrying products (excluding oil and gas) account for only 0.4% of real GDP.  Manufacturing, 
developed on the basis of Saudi Arabia's compar ative advantage in energy-intensive industries 
(Chapter IV(3)), represent 12.6% of real GDP, wh ile agriculture and related activities account for 
4.6% (Chapter IV(1)).  Services contribute 50.6% to  real GDP and employ about three quarters of the 
workforce (Chapter IV(4)).  GDP per capita is estimated at US$16,500 for 2010 (Table I.1).  
The Kingdom of Saudi Arabia ranks 55th (out of 177 countries) on the UNDP's Human Development 
Index.2 
Table I.1  
Saudi Arabia at a glance, 2010 
 2010a  
Area (km2) 2,149,690 
Population (million) 27.1 
Expatriates (million)  8.4 
GDP total (US$ billion) 447.8 
GDP per capita (US$) 16,500 
Share of GDP at constant prices (%)  
Agriculture, forestry and fishing 4.6 
Mining and quarrying (excluding cr ude oil and natural gas) 0.4 
Crude oil and natural gas 23.1 
Manufacturing 12.6 
   Oil refining 2.5 
   Other industries 10.1 
Electricity, gas and water 1.9 
Construction 6.9 
Services 50.6 
Wholesale & retail trade, and restaurants & hotels 8.9 
Transport, storage, and communications 7.4 
Finance, insurance, real estate and business services  12.5 
Government services 18.6 
Community, social and personal services 3.9 
a Preliminary. 
Source:  Central Department of Statistics and Info rmation (CDSI) of the Kingdom of Saudi Arabia. 
2. Saudi Arabia started applying the Gulf Cooperation Council (GCC)3 common external tariff 
in 2003 (Chapter III(1)(iv)(a)).  The Saudi Arabian riyal (SAR), the national currency, has been 
pegged to the U.S. dollar (SAR 3.75 per US$) since 1986.4  In December 2009, Bahrain, Kuwait, 
                                                      
1 At producers' value in constant prices (1999=100).  In current prices, the oil sector contributed 48.1% 
to GDP in 2009 (61% in 2008) (SAMA, 2010). 
2 UNDP (2010). 
3 The other GCC members are:  Bahrain, Kuwait, Om an, Qatar, and the United Arab Emirates (UAE). 
4 In June 1986, the SAR was officially pegged to  the IMF's Special Drawing Rights (SDR).  Until the 
end of 2002, the SAR was effectively (informally) anchor ed to the U.S. dollar, within the framework of an 
official link to the SDR.  The SAR became offi cially pegged to the U.S. dollar from 2003. WT/TPR/S/256/Rev.1 Trade Policy Review 
Page 2 
  
Qatar, and the Kingdom of Saudi Arabia ratifie d an agreement to establish a monetary union.5  I n  
December 2005, the Supreme Council of the GC C member states adopted macroeconomics and 
budgetary convergence criteria, such as a cap on bu dget deficits relative to national GDP, a public 
debt to GDP ratio, inflation rates, national interest rates, and adequacy of foreign exchange reserves.  
In May 2007, the Financial and Economic Cooperation Committee determined the rates and ratios of 
the convergence criteria.  Technical details of th e monetary union are currently under discussion in 
the Gulf Monetary Council, established on 27 March 2010 .  The date to achieve a single currency is 
yet to be determined. Saudi Arabia accepted the obl igations of Article VIII of the IMF Agreement in 
the early 1960s.  It has no restrictions on capital receipts or payments by residents or non-residents. 
3. Since the mid 1990s, Saudi Arabia has been implementing a development strategy aimed at, 
inter alia , reducing its high dependence on crude oil.  Th is is being done by promoting downstream 
industries (Chapter IV(2)), improving educati on and health services, and modernizing the 
infrastructure.  The development strategy has also been accompanied by structural reforms to create a 
more business-friendly environment, and increase the role of the private sector (foreign and local) in 
the economy (section (3)(ii) and Chapter II(5)).  At the same time, some state-owned companies, 
including Saudi Arabian Oil Company (ARAMCO), continue to be crucial for the Saudi economy 
(Chapter III(3)(iii)). 
(2) RECENT ECONOMIC DEVELOPMENTS  
4. Saudi Arabia's development strategy has resu lted in a positive economic performance in the 
past few years, in terms of GDP growth, moderate  inflation, and surpluses in both its overall fiscal 
position (except for 2009) and external current account .  Furthermore, Saudi Arabia responded with a 
countercyclical policy to the global economic crisis , mainly through a sizeable fiscal stimulus that 
limited the impact of the crisis6, supported solid growth of the non-oil sector, and contributed to 
reviving world demand.7  In addition, Saudi Arabia, a member of the G208, has exercised restraint 
over the imposition of new trade restrictions despite the global downturn.9  Real GDP grew at an 
annual average rate of 3.2% in 2005-10 (1.4% ove r 1993-2002), spurred by crude Arabian oil prices, 
which averaged US$69, and oil production of 8.8 b illion barrels per day on average during the period 
(Table I.2).  A real GDP growth rate of 6.5% is expected by the IMF for 2011 (4.1% in 2010).10  
5. The annual average inflation rate in Saudi Arab ia, as measured by the consumer price index, 
was 4.6% over 2005-10 (up from 0.3% during 1993-2002).  The main goals of the monetary policy conducted by the central bank, the Saudi Arabian Monetary Agency (SAMA), are maintaining price 
stability and the peg to the U.S. dollar.  The pe gged exchange rate arrangement has provided a 
credible and stable nominal anchor and contributed to macroeconomic stability.
11   Nonetheless, the 
depreciation of the U.S. dollar against other major currencies over the last few years also contributed to the rise in Saudi Arabia's inflation rate, partic ularly in 2008 when it peaked at 9.9%.  The Saudi 
                                                      
5 Oman and the UAE are not joining the monetary union. 
6 A US$400 billion five-year investment and development programme was announced in April 2009. 
Oxford Business Group (2010). 
7 IMF Public Information Notice No. 10/117, 27 August 2010.  Viewed at:  http://www.imf.org/ 
external/np/sec/pn/2010/pn10117.htm. 
8 The G20 was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together 
major advanced and emerging economies to stabilize the global financial market.  Since its inception, the G20 
has held annual meetings and discussed measures to promote financial stability and sustainable economic 
growth and development in the world.  (G20 online info rmation.  Viewed at:  http://www.g20.org/index.aspx). 
9 WTO Report on G20 Trade Measures (May 2010  to October 2010, undated).  Viewed at:  
http://www.wto.org/englis h/news_e/news10_e/g20_w to_report_nov_e.doc. 
10 IMF (2011). 
11 IMF Public Information Notice No. 10/117, 27 August 2010. The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 3 
 
 
authorities indicate that there are no plans to drop the pe g to the U.S. dollar.  An inflation rate of 5.4% 
is expected by the IMF for 2011 (same as in 2010).12 
Table I.2 
Selected economic indicators, 2005-10 
 2005 2006 2007 2008 2009 2010a 
Miscellaneous       
GDP at current prices (SAR billion)  1,182.5 1335.6 1,442.6 1,786.1 1,412. 6 1,679.1 
GDP at constant prices of 1999 (SAR  billion) 762.3 786.3 802.2 836.1 836.9 871.6 
Real GDP (% change) 5.6 3.2 2.0 4.2 0.1 4.1 
Consumer price index (average;  % change) 0.6 2.3 4.1 9.9 5.1 5.4 
Monetary sector       
Broad money (M3;  SAR billion)  553.7 660.6 789.8 929. 1 1,028.9 1,080.4 
Net foreign assets of domestic banks (SAR billion) 26.4 70. 6 42.5 41.5 111.2 98.4 
Interest rate (%)b 3.9 5.1 4.9 3.3 0.9 0.7 
Banks capital adequacy ratio (Basel standard)c 17.8 21.9 20.6 16.0 16.5 17.1 
Public finances       
Fiscal balance (% of GDP)d 18.4 21.0 12.2 32.5 -6.1 6.6 
Government revenue (SAR billi on) 564.3 673.7 642.8 1,101.0 509.8 735.0 
Oil revenue (SAR billion) 504.5 604.5 562.2 983.4 434.4 668.9 
Government expenditure (SAR b illion) 346.5 393.3 466. 2 520.1 596.4 626.5 
National accounts (% of GDP)       
Private consumption 26.5 26.6 30.1 27.2 38.5 35.1 
Government consumption 22.2 23.3 22.3 19.3 25.3 22.4 
Gross fixed capital formatione 16.5 17.5 20.5 19.5 23.7 20.7 
Net exports of goods and services 33.1 31.4 27.0 30.7 10.6 19.6 
External sector       
Real effective exchange rate (2000 = 100) 82.3 80.8 78.5 97.7 105.7 105.3 
Current account (% of GDP) 28.5 27.8 24.3 27.8 5.6 14.9 
SAMA's foreign reserves (in months of imports) 21.2 23.9 25.3 30.1 30.4 30.7 
Trade in goods and services (% of GDP) 88.7 95.1 102.5 104.9 96.7 97.4 
Oil production (million barrels;  daily average) 9.4 9.2 8.8 9.2 8.2 8.2 
Price of Arabian light oil (US$, average) 50.21 61.10 68.75 95.16 61.38 77.82 
a Preliminary. 
b Interest rate on domestic currency depos its (3 months SIBOR yearly average). 
c Basel II as from 2008, and Basel I for the preceding years. d Negative sign indicates deficit. 
e Includes change in inventories. 
 
Source:  IMF, International Financial Statistics, various issues. 
6. Saudi Arabia's fiscal balance, as a percentage of GDP, went from a surplus of 32.5% in 2008 
to a deficit of 6.1% in 2009, its first deficit si nce 2002.  This was due to a 54% fall in government 
revenue in the year and an increase of 15% in g overnment expenditure in an effort to support 
economic activity during the global crisis.  Saudi Ar abia's overall fiscal surplus, as a percentage of 
GDP, averaged 21% during 2005-09, and is estimated at 6.6% for 2010 (Table I.2).  With oil-related revenues accounting for 91% of total public revenue in 2010, Saudi Arab ia is taking steps to achieve a 
sustainable non-hydrocarbon budget position through, inter alia , efforts to diversify the economy and 
modernize revenue collection;  and measures are envisaged to slow the growth in domestic 
consumption of oil products,  such as reduci ng electricity subsidies (Chapter III(3)(i)).  
                                                      
12 IMF (2011). WT/TPR/S/256/Rev.1 Trade Policy Review 
Page 4 
  
(3) TRADE PERFORMANCE AND INVESTMENT  
(i) Trade in goods and services 
7. Saudi Arabia's external current account surp lus averaged 20.2% of GDP per year during 
2005-10 (Table I.2).  This impressive performan ce was led by oil exports, which surged from 
US$161,568 million in 2005 to a peak of US $281,029 million in 2008;  they were 
US$215,247 million in 2010.  Nonetheless, the exte rnal current account, as a percentage of GDP, 
dropped from 28.5% in 2005 to 5. 6% in 2009 and 14.9% in 2010 reflecting lower oil prices, 
production, and revenues.  A surplus of 20.6% of GDP is predicted by the IMF for 2011.13 
8. Saudi Arabia's economy is increasingly dependent  on international trade:  the ratio of 
merchandise and services trade (exports and imports ) to GDP rose from 88.7% in 2005 to a peak of 
104.9% in 2008 and reached 97.4% in 2010.  In 2010 , Saudi Arabia ranked 12th among world 
merchandise exporters and 21st among importers (considering the c ountries of the EU together and 
excluding intra-EU trade).  In services trade, Saudi Arabia ranked 33rd among exporters and 11th 
among importers.14 
9. Saudi Arabia's export base is highly concentrated in fuels (petroleum and gas).  The share of 
fuels in total merchandise exports depends largely on the evolution of Arabian oil world prices and 
Saudi Arabia's quota production within the Organi zation of Petroleum Exporting Countries (OPEC).  
In value terms, the share of fuels in total mercha ndise exports (including re -exports) went from 89.5% 
in 2005 to 85.7% in 2010 (Chart I.1).  Non-oi l exports' are led by chemicals (8.7% of total 
merchandise exports in 2010), while the share of agriculture products is minimal (Table AI.1). 
10. Saudi Arabia's imports have increased in line with the country's significant economic growth 
over the last few years.  Total merchandise imports rose from US$59,463 million in 2005 to 
US$106,863 million in 2010 (Table AI.2).  Al most 80% of total merchandise imports are 
manufactures, led by machinery and transport equi pment (42.4% of total merchandise imports in 
2010), followed by automotive products, other non-electrical machinery, and chemicals.  Food and other agricultural imports represented 16.5% of to tal merchandise imports in 2010 (up from 15.3% in 
2005) (Chart I.1). 
11. Together, Asia accounts for about 60% of Saudi Arabia's total merchandise exports (including 
re-exports), led by Japan with a share of 14.4% in 2010 (15.6% in 2005), closely followed by China 
(Chart I.2).  The United States is also a major des tination of Saudi merchandi se exports with 13.2% of 
the total in 2010 (15.5% in 2005), while the EU's share dropped from 15.1% in 2005 to 9.5% in 2010 
(Table AI.3). 
12. Asia and Europe, together, supply about 70% of  Saudi Arabia's total merchandise imports.  
Nonetheless, the United States remains the single major source of Saudis merchandise imports with 
13.2% of the total in 2010 (14.8% in 2005), followed by China, Germany, and Japan.  The share of Middle East countries, led by the UAE, has remained relatively stable at around 7% over the last few 
years (Table AI.4). 
                                                      
13 IMF (2011). 
14 WTO Statistics database, "Trade Profiles:  Saudi Arabia".  Viewed at: http://stat.wto.org/Country 
Profiles/SA_e.htm. The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 5 
 
 
Other 
manufactures
4.0
Agricultural raw 
material
0.9Chart I.1
Structure of merchandise trade, 2005 and 2010
2005 2010
(a)  Exports, including re-exports (f.o.b.)
Total:   US$180,571.8 million Total:  US$251,142.7million
(b)  Imports (c.i.f.)
Total:   US$59,462.7 million Total:   US$106,862.8 millionPer cent
Source :  Manufactures
78.3Manufactures
76.1Food
14.6
Mining
4.3
Chemicals
9.7Textiles and 
clothing
4.5
Other semi-
manufactures
7.4Electrical 
machines
10.3Transport 
equipment  
22.5Iron and 
steel
5.6Other 
manufacturing 
5.8
Non-electrical 
machinery
12.5Fuels
85.7Other primary 
products
1.0Other 
manufactures
3.3
Fuels
89.5
Other 
2.1Chemicals
6.1Other
0.1
Other primary 
products
1.5Chemicals
8.7Other
0.1
Food
15.6
Mining
5.1
Chemicals  10.1Textiles and 
clothing
3.5
Other semi-
manufactures  7.6Electrical 
machines 11.0Transport 
equipment  
18.9
Iron and steel
6.3Other 
manufacturing
6.2
Non-electrical 
machinery
12.5Other 
2.3
Agricultural raw 
material
0.7
WTO Secretariat estimates, based on UNSD, Comtra de database figure (SITC Rev.3); and Central 
Department of Statistics and Informatio n (CDSI) of the Kingdom of Saudi Arabia.  WT/TPR/S/256/Rev.1 Trade Policy Review 
Page 6 
  
Chart I.2
Direction of merchandise trade, 2005 and 2010
2005 2010
(a)    Exports, including re-exports (f.o.b.)
Total: US$180,571.8 million
(b)    Imports (c.i.f.)
Total: US$59,462.7 million Total: US$106,862.8 million
Source: WTO Secretariat estimates, based on UNSD, Comtrade database figure (SITC Rev.3); and CentralMiddle East
9.4%
Total: US$251,142.7 millionAfrica
5.0%United States
15.5%
Africa
4.5%
Other Europe
1.1%
Germany
8.2%China
6.0%Other Asia
30.5%
America
15.1%United States
13.2%
Japan
15.6%Spain
1.6%Other America
1.9%
Japan
14.4%Other Europe
1.1%Other Asia
32.7%
America
17.3%
United States
14.8%
France
3.4%Other America
4.5%
Other EU(27)
17.0%Other 
Europe
3.7%Japan
9.0%
China
7.4%Other Asia
12.4%Others
1.9%United States
13.2%
Germany
7.7%Other America
5.5%
Other EU(27)
13.3%Other 
Europe
4.4%Japan
7.5%
China
11.7%Other Asia
12.5%Others
2.0%
America
19.3%America
18.7%Middle East
10.8%Other EU(27)
13.5%
China
11.9%Spain
1.9%
Italy
3.8%France
4.1%
Italy
3.2%Other America
1.8%
EC(27)
15.1%Asia
52.1%EC(27)
9.5%Other EU(27)
7.6%
Asia
59.0%
Africa
3.1%United Arab 
Emirates
2.6%Other Middle 
East
4.6%Korea, Rep. of
3.6%
EC(27)
32.4%Asia
32.4%
Africa
3.2%United Arab 
Emirates
3.5%Other Middle 
East
3.8%Korea, Rep. of
4.4%
EC(27)
28.3%Asia
36.1%
Department of Statistics and Information (CDSI) of the Kingdom of Saudi Arabia. The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 7 
 
 
13. Balance-of-payments data indicate that Saudi Arabia is, increasingly, a net importer of 
services, with a deficit averaging around US$50,0 00 million per year during 2005-10, peaking at 
US$66,089 million in 2010 (Table I.3).  The de ficit of transportation services soared from 
US$2,969 million in 2005 to US$10,692 million in 2010, while the deficit of travel services jumped 
from US$4,457 million to US$14,423 million. 
Table I.3 
Balance of payments, 2005-10 
(US$ million) 
 2005 2006 2007 2008 2009 2010 
Current account balance 89,990 98,934 93,329 132,322 20,955 66,752 
Good and services 104,325 111,863 103,969 146,169 39,988 87,629 
Goods 126,019 147,194 150,632 212,027 105,230 153,718 
General merchandise 126,633 147,834 151,582 212,708 105,808 154,354 
Exports 180,395 210,863 233,069 313,351 192,190 251,009 
Oil exports 161,568 188,216 205,315 281,029 163,064 215,247 
Non-oil exports 18,827 22,647 27,754 32,321 29,126 35,762 
Imports 53,762 63,029 81,487 100,643 86,382 96,655 
Non-monetary gold -614 -640 -951 -681 -579 -636 
Credit 177 160 105 130 117 140 
Debit 791 800 1,055 811 696 776 
Services -21,694 -35,332 -46,662 -65,858 -65,242 -66,089 
Transportation -2,969 -3,312 -7,338 -13,267 -9,462 -10,692 
Credit 1,819 2,297 1,834 2,389 1,940 2,031 
Debit 4,788 5,610 9,173 15,656 11,403 12,723 
Travel -4,457 -8,199 -14,190 -9,219 -14,424 -14,423 
Credit 4,622 4,762 5,968 5,910 5,995 6,712 
Debit 9,080 12,961 20,158 15,129 20,419 21,135 
Communication services -151 -309 -554 -1,047 -1,652 -1,904 
Credit 192 244 246 222 205 293 
Debit 343 553 800 1,269 1,857 2,197 
Construction services -1,415 -3,154 -6,318 -4,491 -3,288 -3,789 
Credit .. .. .. .. .. .. 
Debit 1,415 3,154 6,318 4,491 3,288 3,789 
Insurance services -491 -588 -990 -1,677 -1,171 -1,379 
Credit .. .. .. 143 330 290 
Debit 491 588 990 1,820 1,501 1,669 
Financial services -3,530 -6,548 -2,526 -1,074 -287 -83 
Credit .. .. .. 434 901 951 
Debit 3,530 6,548 2,526 1,508 1,188 1,034 
Government servicesa -13,196 -19,838 -16,510 -25,419 -27,632 -25,439 
Credit 231 228 244 241 321 337 
Debit 13,426 20,066 16,754 25,660 27,953 25,776 
Other servicesb 4,515 6,616 1,763 9,664 -7,326 -8,380 
Credit 4,537 6,651 7,686 34 56 69 
Debit 22 35 5,923 9,698 7,383 8,449 
Income 432 3,830 6,392 9,165 8,640 7,044 
Compensation of employees -504 -559 -577 -534 -568 -653 
Credit 94 106 123 216 214 236 
Debit 598 664 700 751 782 890 
Investment income 936 4,388 6,969 9,699 9,207 7,697 
Table I.3 (cont'd) WT/TPR/S/256/Rev.1 Trade Policy Review 
Page 8 
  
 2005 2006 2007 2008 2009 2010 
Direct investment -2,784 -3,383 -4,284 -6,451 -7,274 -6,953 
Credit 1,240 2,590 3,751 3,101 2,319 2,961 
Debit 4,024 5,973 8,035 9,553 9,593 9,914 
Portfolio investment 2,976 6,217 9,003 14,170 14,077 13,875 
Credit 2,976 6,217 9,003 14,232 14,219 13,964 
Debit .. .. .. 62 143 89 
Other investment 744 1,554 2,251 1,981 2,404 775 
Credit 744 1,554 2,251 3,948 2,999 1,010 
Debit .. .. .. 1,968 595 235 
Current transfers -14,766 -16,758 -17,032 -23,012 -27,673 -27,921 
General government  -781 -1,168 -975 -1,820 -1,919 -1,656 
Credit .. .. .. .. .. .. 
Debit 781 1,168 975 1,820 1,919 1,656 
Other sectors -13,985 -15,590 -16,057 -21,192 -25,754 -26,264 
Workers' remittances - 13,705 -15,279 - 15,736 -20,945 - 25,688 - 26,179 
Credit .. .. .. .. .. .. 
Debit 13,705 15,279 15,736 20,945 25,688 26,179 
Other transfers -280 -312 -321 -246 -66 -85 
Credit .. .. .. .. .. .. 
Debit 280 312 321 246 66 85 
Capital and financial account  -55,267 -78,401 -77,719 -102,296 39,800 -42,205 
Direct investment 12,447 18,332 24,453 35,958 34,280 17,653 
Abroad 350 39 135 -3,498 -2,177 -3,907 
In Saudi economy 12,097 18,293 24,319 39,456 36,458 21,560 
Portfolio investment  350 -11,933 -5,472 -1,631 -20,139 -17,437 
Assets 350 -11,933 -5,472 -3,848 -20,133 -18,940 
Liabilities 0 0 0 2,217 -5 1,503 
Other investments -4,442 -13,886 -16,861 401 -6,898 -7,393 
Assets -4,421 -13,957 -16,838 -2,562 -9,542 -6,523 
Liabilities -21 71 -24 2,963 2,644  -870 
Reserve assets -63,622 -70,914 -79,839 -137,025 32,556 -35,028 
Monetary gold 0 0 0 -231 0 0 
Special drawing rights -31 -90 -81 -14 -10,193 282 
Reserve position in the Fund 1,593 994 181 -653 -633 36 
Others reserve assets -65,183 -71,817 -79,939 -136,127 43,382 -35,346 
Currency and deposits -19,147 -3,632 -35,967 -39,143 21,327 -5,913 
Securities -46,036 - 68,185 -43,971  -96,983 22, 055 -29,433 
Errors and omissions  -34,724 -20,533 -15,610 -30,026 -60,754    -24,547 
.. Not available. 
a Not included elsewhere. 
b Other services = computer, royalties, persona l and cultural services, and business services. 
Source: SAMA online information.  Viewed  at:  http://www.sama.gov.sa/sites/ samaen/ReportsStatistics/Pages/ 
 AnnualReport.aspx. 
(ii) Foreign direct investment 
14. Saudi Arabia has become the eighth biggest recipi ent of foreign direct investment (FDI) in the 
world.  Its annual inflow of FDI jumped from an  annual average of US$1,534 million during   1995-
2005 to about US$25,000 million over 2005-09 (Table I.4).  This was largely the result of positive 
developments in the economy over the period, and th e steps taken by Saudi Arabia to improve its The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 9 
 
 
investment climate, including through the opening up to foreign investment of certain key economic 
activities (e.g. mining, petrochemicals, telecommuni cations), and the devel opment of four economic 
cities and special economic zones (Chapter II(5)). 
Table I.4 
Foreign direct investment, 2005-09 
(US$ million) 
 2005 2006 2007 2008 2009 
FDI inflows 12,097 17,140 22,821 38,151 35,514 
 (% of gross fixed capital formation) .. 29.4 29.9 46.0 43.5 
FDI stock 33,534 51,827 73,480 111,631 147,145 
(% of GDP) .. .. 19.2 23.9 40.5 
FDI inflows by sector:  
Agriculture and fishing 8 .. 24 35 42 
Extraction of oil and gas .. 5.6 2,724 2,866 2,758 
Manufacture 5.5 6.6 9,659 12,014 11,683 
   Coke and refined petroleum pr oducts 3,016 3,042 3,573 4,516 4,279 
   Chemicals and chemical products 2,001 4.1 3,998 4,880 4,999 
Manufacture of basic metals .. .. 949 668 349 
Manufacture of fabricated metal product 100 100 314 520 510 
Other manufacturing .. .. 825 1,430 1,546 
Electricity, gas and water supply 2,262 1,694 1,371 2,032 1,205 
Contracting 92 1,034 1,552 3,634 4,444 
Trade 56 .. 960 1,021 1,307 
Hotels and restaurants 10.1 .. 34 267 172 
Transport, storage and communications 1,060 .. 1,169 2,866 1,987 
Finance services and insurance 2,170 2,278 1,550 4,139 3,740 
Real estate 2,032 1,605 2,707 6,996 4,658 
Other economic activities ..  .. 1,070 2,281 3,520 
FDI inflows by main countries of origin  
United States 84 1,594 3,978 5,228 5,830 
United Arab Emirates 5,014 -19 2,381 5,595 3,787 
Japan 3,750 3,512 1,068 3,246 2,044 
Kuwait 25 267 2,370 4,638 4,299 
France 2,025 2,053 1,136 3,022 2,558 
Netherlands 49 820 904 1,363 1,344 
China .. 1,100 1,428 1,323 1,665 
.. Not available. 
Source:  SAGIA (2010), Annual Report of FDI Saudi Arabia 2010 , Riyadh. 
15. Saudi Arabia has improved its business envi ronment:  for example, the minimum capital 
requirement for starting a business (SAR 500,000)  was removed on 16 July 2007, and foreign 
businessmen may now obtain a multiple-entry visa, va lid for 12 months, without requiring a letter of 
invitation from a Saudi host or approval from th e local Chamber of Commerce.  As a result, WT/TPR/S/256/Rev.1 Trade Policy Review 
Page 10 
  
Saudi Arabia ranks 11th (out of 183 economies) in the World Bank's Ease of Doing Business 2011 
Index (up from 67th in 2005).15 
16. On the basis of UNCTAD's Inward FDI Performance Index , Saudi Arabia ranked 17th out of 
141 economies in 2009 (55th in 2007).16  Saudi Arabia was 29th in UNCTAD's Inward FDI Potential  
Index  in 2008 (the same as in 2007)17, which reflects, in general,  inhibited FDI since foreign 
companies still face investment restrictions in  certain activities, including fisheries and oil 
exploration/drilling/production (Chapter II(5)). 
17. During 2005-09, 16.7% of total FDI inflows was for projects related to chemicals and 
chemical products, followed by coke  and refined petroleum products (14.4%), real estate (12.2%), 
contracting (10.5%), and extraction of oil and gas.   By country of origin, the United States is the 
largest single source of FDI into Saudi Arabia ( 17.6% of total inflows during 2005-09), followed by 
the UAE, Japan, and Kuwait (Table I.4). 
18. Saudi Arabia has also become an  increasing investor in the rest of the world, with annual FDI 
outflows averaging over US$6,000 million duri ng 2005-10 (up from US$1, 067 million in 1995-05).18  
(4) OUTLOOK  
19. Under its Ninth Development Plan, Saudi Arabia  aims to achieve annual average real GDP 
growth of 5.2% during 2010-14, which will in crease GDP per capita from SAR 46,200 in 2009 to 
SAR 53,200 in 2014.19  The economic outlook for Saudi Arabia  is generally positive as hydrocarbon 
prices are likely to remain relatively high and larg e investments undertaken over the past few years 
may set the stage for a more self-sustained growth pr ocess.  More integration within the GCC is also 
likely to enhance growth prospects for Saudi Arabia  and the other countries in the region through, 
inter alia , a more efficient allocation of resources, larger intra-GCC trade, strong boosts to FDI 
resulting from increased business opportunities, a nd higher productivity as a result of more 
competition among GCC countries.  Key risks includ e adverse geopolitical developments, to which 
Saudi Arabia is exposed to a significant extent.   
20. Saudi Arabia's economic policy aims to furt her reduce its dependency on hydrocarbons and 
accelerating non-oil (e.g. manufacturing and services)  growth to generate more employment 
opportunities for the growing Saudi labour force.20  Given that the oil sector is not labour-intensive, 
                                                      
15 The index is based on nine topics (Saudi Arabia's ranking in parenthesis), i.e. starting a business 
(13);  dealing with licences (14);  registering property (1);   getting credit (46);  protecting investors (16);  paying 
taxes (6);  trading across borders (18);  enforcing contracts (140);  and closing a business (65).  World Bank Group online information.  Viewed at:  http://www.doingbusiness.org/data/exploreeconomies/saudi-arabia/. 
16 UNCTAD's Inward FDI Performance Index measures  the extent to which host countries receive 
inward FDI, and ranks countries by the amount of FDI they receive relative to th eir economic size.  It is 
calculated as the ratio of a country' s share in global FDI inflows to its share in global GDP.  Viewed at: 
http://www.unctad.org/Templates/Search.asp?intItemID =6018&lang=1&frmSearchStr=inward+fdi+potential& 
frmCategory=all&section=whole#page. 
17 UNCTAD's Inward FDI Potential Index  measures the extent to which host countries receive inward 
FDI, and ranks countries by the amount of FDI they receive relative to their potential.  It is calculated on the basis of structural variables, such as country  risk, and trade-related measures.  Viewed at: 
http://www.unctad.org/Templates/Search.asp?intItemID =6018&lang=1&frmSearchStr=inward+fdi+potential& 
frmCategory=all&section=whole#page. 
18 UNCTAD (2010). 
19 SAMA (2010). 
20 Saudi Arabia aims to develop as the region's backbone in manufacturing, and to further develop 
financial services, e.g. with the planned establishmen t of the King Abdullah Financial District in Riyadh. The Kingdom of Saudi Arab ia WT/TPR/S/256/Rev.1 
 Page 11 
 
 
and increasing public sector employment is not sustai nable in the long-run, Saudi Arabia is trying to 
enhance the employability of nationals by reduc ing the educational mismatch between Saudis' 
qualifications and private-sector needs through the "Saudization" programme.21  It is estimated that 
Saudi Arabia needs to create over 5 million jobs by 2030 to meet the requirements of Saudis entering 
the job market.22  Almost 6 million foreign workers (some 80%  of the total labour force) contribute to 
Saudi Arabia's economy.23 
21. Saudi Arabia also aims to ensu re inter-generational economic equ ity in the exploitation of its 
non-renewable natural wealth.  With this in mi nd, it plans to spend US$400 billion over the next 
five years to upgrade its infrastructure in areas su ch as electricity, water, housing, education and 
transportation.  Moreover, construction of the four economic cities will continue24;  the economic 
cities are expected to generate 1.3 million new jobs, accommodate 2.4 million people, and increase 
GDP per capita to around US$33,000 by 2020.25 
22. On 23 February 2011, Saudi Arabia unveiled a ser ies of benefits for its population estimated 
to be worth US$35 billion to, inter alia , pay aid for unemployed young people and tuition fees to 
study abroad, and support families to get affordable housing.26 
 
                                                      
21 The "Saudization" programme seeks, inter alia , to provide timely and periodic information on the 
labour market, encourage the private sector to give job opportunities to qualified and skilled citizens willing to 
work, and to rationalize the recruitment of the foreign labour force and restrict it only to specializations not 
sufficiently available among Saudis.  Among government efforts are campai gns conducted by the Ministry of 
Labour for employing Saudis.  These aim at determining the number and quality of Sa udi job seekers, qualifying 
those who lack specific skills through training programmes on jobs needed in the labour market, in cooperation 
with the Human Resource Development Fund;  and providin g them with suitable job opportunities in the private 
sector (SAMA, 2010). 
22 With around 70% of Saudis under the age of 30, it is estimated that some 250,000 men enter the job 
market every year.  Due to the incr easing economic necessity for women to work, as well as the Government's 
desire to include them in the workforce, it is estimated that at least 100,000 further jobs a year will be required 
for women ( Arab News , 26 January 2011). 
23 Center for Strategic and International Studies (2011). 
24 The economic cities, whose construction starte d in 2007, focus mainly on heavy industries, 
comprising petrochemical, copper refinery and smelter, and aluminium complexes. 
25 Arab News , 26 January 2011. 
26 The Real Estate Mortgage Law is in the pipeline (Chapter IV(5)(ii)(a)).