For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
Saudi Arabia is the largest economy in the Middle East and the richest Arab country. The policy of large-scale public works undertaken by the authorities, as well as foreign direct investment and the soundness of the banking and ﬁnancial system, have enabled the country to become the number one regional economy and one of the largest in the world. However, the economy of Saudi Arabia is almost entirely based on oil, with GDP growth being closely linked to real oil growth. In 2021, increasing oil prices and the stabilization of the COVID-19 pandemic contributed to a GDP growth of 3.2% (IMF Economic and Political Outlook, October 2022). The forecasts of the Ministry of Finance, the OECD and the IMF agree on a growth rate of 7.6% in 2023, before coming back to 3.7% in 2024.
High oil revenue weighed on Saudi Arabia's current account balance, with an estimated budgetary surplus of over USD 161.52 billion in 2022. Such surplus is likely to be narrowed down to USD 122.69 billion in 2023, and 103.94 billion in 2024 (IMF, 2023). The measure taken to curb the impact of COVID-19 on the private sector entailed an increase in public debt, which stood at 30% in 2021 but was pushed back to 24.8% in 2022. The debt-to-GDP ratio is expected to stabilised at 25.1% in 2023 and 24.6% in 2024 (IMF, 2023). Inflation picked up to 3.1% in 2021 partly as a consequence of the hike in the VAT rate from 5% to 15%, and then 2.7% in 2022. It should stabilize around 2% in the upcoming years (2.2% in 2023 and 2% in 2024).
The standard of living in Saudi Arabia is one of the highest in the Middle East, with a GDP per capita of over USD 27,941 (IMF, 2023). According to the latest data available from the Saudi General Authority for Statistics, unemployment in Saudi Arabia among citizens increased to 9.9% in the third quarter of 2022, up 0.2% from the previous quarter but the overall unemployment rate remained unchanged at 5.8%. Nevertheless, the unemployment rate is much higher for female citizens compared to the male population (22.3% vs. 6.1%).
|Main Indicators||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||734.27||868.59||1,108.15||1,061.90||1,082.08|
|GDP (Constant Prices, Annual % Change)||-4.3||3.9||8.7||3.1||3.1|
|GDP per Capita (USD)||20,971||25,464||31,850||29,922||29,893|
|General Government Gross Debt (in % of GDP)||31.0||28.8||22.6||23.6||23.1|
|Inflation Rate (%)||3.4||3.1||2.5||2.8||2.3|
|Unemployment Rate (% of the Labour Force)||7.7||6.7||0.0||0.0||0.0|
|Current Account (billions USD)||-22.81||44.32||152.84||66.03||38.87|
|Current Account (in % of GDP)||-3.1||5.1||13.8||6.2||3.6|
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Agriculture accounts for 2.3% of Saudi Arabia’s GDP and employs 2% of the active population (World Bank, latest data available). Because of geographical and climatic constraints (droughts), Saudi Arabia imports most of its agricultural and food product requirements. Water scarcity is a serious regional problem that the country is likely to face in the coming years, as the growing cultivation of wheat presents the threat of water depletion. Saudi Arabia is the largest market for agriculture in the GCC region; however, productivity remains limited compared with the public investment that funds the sector.
The industrial sector represents 45.5% of the GDP and employs 25% of the workforce. It is dominated by non-manufacturing activities (oil drilling). The country has the largest oil reserves in the world and is also the largest producer and exporter of oil in the world. Oil accounts for nearly 87% of exports and 70% of government revenues (and more than 40% of GDP). The share of the non-oil industrial sector has been increasing along with the economic diversification efforts of the Saudi authorities (although manufacturing currently represents only 13,1% of GDP).
Lastly, services represent 52.2% of the GDP and employ 73% of the active population. This sector is mainly dominated by tourism, ﬁnancial and banking services and the insurance sector. Tourism generates very high revenues (almost 4 million tourists per year), due in particular to the Hajj, the pilgrimage to Mecca that takes place in the last month of the Islamic year, that all Muslims are expected to make at least once during their lifetime. The Saudi government launched the “Financial Sector Development Program”, aimed at enabling financial institutions to support the growth of the private sector, develop an advanced capital market and improve financial planning.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024 (International Monetary Fund - IMF, 2023). The impact of the 2022 world events appears to have affected both sides of most sectors and markets in this country for the third year in a row - demand disruptions having run up against supply problems - making the short-term outlook uncertain for agriculture, industry and service sectors.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||2.4||24.8||72.8|
|Value Added (in % of GDP)||2.3||45.5||46.7|
|Value Added (Annual % Change)||2.6||1.7||4.7|
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Latest Update: September 2023