Regional stability vital to economy
SAUDI ARABIA'S economy is now the largest in the Middle East and high on the agenda is a drive to further increase economic growth, create more jobs and find roles for all citizens in the nation's future development. To achieve this, it believes that regional stability, foreign investment and the promotion of hi-tech industry are essential.
Saudi Arabia is the world's 25th largest importer/exporter, with foreign trade totalling $608billion. In 2003 and last year, Saudi Arabia was given 'A' credit ratings by Standard & Poor's for long-term local currency and foreign currency, based on the kingdom's macro-economic stability and substantial external liquidity.
The kingdom has used oil revenues to expand and diversify the economy to reduce its dependence on fossil fuel, which has resulted in impressive gains in the non-oil sector.
In 2003, the non-oil industrial sector was estimated to have grown by 3.9 per cent; the construction sector by 2.8 per cent; electricity, gas, and water by 6.2 per cent; transport and communications by 4.3 per cent; and wholesale, retail, restaurants and hotels by 4.4 per cent in real prices.
Over the past three decades, the non-oil sector of the economy has grown from 35 per cent to more than 60 per cent of total GDP.
The stock market, which has developed significantly over the past decade, is by far the largest in the Middle East. The capital markets law is expected to stimulate and strengthen the economy and increase the participation of citizens in capital markets.
Since the kingdom announced plans to privatise many of its vital economic sectors, private companies have begun to play an increasingly important role in the economy. The Supreme Economic Council has taken overall charge of the programme, specifying the sectors to be privatised and setting out a strategic plan and timetable.
The sectors now open to privatisation include: telecommunications, civil aviation, desalination, highway management, railways, sports clubs, health services, government hotels, municipal services, education services, management of social service centres and employment services.
Moves are also in place for the partial privatisation of Saudi Arabian Airlines, the largest airline in the Middle East. The privatisation effort promises increased revenues. In addition, the opening of the Saudi aviation sector to private enterprise gives companies the opportunity to provide domestic airline services.
With 234 trillion cubic feet of gas reserves, the kingdom has the fourth largest non-associated gas reserves in the world. Part of its oil and gas strategy includes expanding the gas network capacity from 3 billion to 7 billion cubic feet.