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Saudi Arabia Economy

The largest economy in the middle east

Growth in Saudi Arabia is gathering pace with a rise in oil production and continued strong consumer demand likely to boost GDP. The Saudi government, which derives about 90% of revenue from oil sales, has benefited from higher production in 2012. The economy grew an estimated 6.8% in 2012 as King Abdullah allocated oil wealth for projects to expand airports, build roads and real estate. The IMF projects GDP growth of 4% in 2013 and 4.4% in 2014.

Saudi Arabia has pumped 9.95 million bpd on average in 2012 and has posted revenue of $330 billion (SR1.24 trillion) in 2012 as the price of Brent crude held above $100 a barrel for a second year. Accordingly, the government has raised its 2013 expenditure target by almost a fifth to a record $219 billion (SR820 billion).

Construction remains one of the major driving forces in Saudi Arabia’s economic performance and is expected to grow by 20% by the end of 2013. The GCC construction market is presently valued at $1.5 trillion of which Saudi Arabia accounts for a total of $629 billion, making it the largest construction hub in the Gulf. Approximately $442 billion of projects are in the design, bidding or construction stage in Saudi Arabia.

The Saudi construction sector enjoys a high level of financial flexibility, particularly thanks to stimulation from the national economy and investments.

Billions Allocated for Diversification

In line with its plans to diversify the economy from oil, in 2013, Saudi Arabia has mobilized funds for the development of transport and infrastructure, education, healthcare and social services to ensure long-term sustainability of economic growth and job creation.

Saudi Arabia has earmarked an investment of $500 billion through to 2020 for infrastructure projects. $76 billion is only earmarked for investment projects in 2013, focusing specifically on those in the science and technology areas.

Infrastructure and Transportation

Saudi Arabia is improving its transport infrastructure, with plans for metros in Jeddah and the capital, Riyadh. It is also planning the Landbridge, a 950 km railway from Jeddah to Damman, and the Haramain High Speed Rail linking Mecca, Medinah and Jeddah to facilitate the movement of pilgrims. These four rail projects are together expected to cost over $50 billion.

Meanwhile, Saudi Arabia is improving facilities in the holy cities, including the $27 billion redevelopment of the Grand Mosque in Mecca and new housing projects for pilgrims in both cities. At the same time it is seeding a series of new economic cities to spread the population around the country and diversify the economy. King Abdullah Economic City on the west coast is the most ambitious, with a $90 billion price tag and a nearly complete port.

On the other hand, the foundations are nearing completion on Prince Alwaleed bin Talal's $20 billion Kingdom Tower in Jeddah which, when complete in 2017, is slated to become the world's tallest building at 1 km in height.


About $54.4 billion (SR204 billion) is earmarked for education for 2013, accounting for about a quarter of the total budgetary allocation and 21% higher than the figure for 2012. The projects include construction of 539 new schools; upgrade of 2,000 school buildings; building more classrooms; and improving safety measures. Furthermore, Saudi Arabia plans to open 15 colleges, build housing facilities for faculty members of newly-formed universities, and construct three university hospitals and technical colleges.

Health and Social Affairs

Saudi Arabia has earmarked $26.6 billion (SR100 billion) for this sector, up 16% over the allocation for 2012 for the construction of primary care centers and 19 new hospitals, in addition, stadiums and sports facilities in 22 towns; 15 social welfare centers; and labor offices. Also, the budget includes allocation for poverty alleviation programs and other social welfare initiatives.

Water, Agriculture, Industry, and other Economic Resources

$15.2 billion (SR57 billion) has been allocated for these sectors for 2013 (up 11% over that in 2012). The projects include increasing water resources through desalination, construction of dams, and improvement of water and water treatment services.

Specialized Credit Development Institutions and Government Financing Programs

The government has allocated $18 billion (SR68.2 billion) in 2013 for this purpose. Specialized credit institutions include various government funds that would facilitate job creation and boost economic growth.

$80 Billion for Electricity

Saudi Arabia plans to invest more than $80 billion in the electric power sector by the end of 2020, with the aim of increasing production capacity, development of transport networks and stations. With a production capacity reaching about only 54 MW in 2012, Saudi Arabia needs to add about 5,000 megawatts annually, given that that thousand megawatts need around $4 billion (SR15 billion) investments.

$109 Billion Renewable Energy Plan

Saudi Arabia is seeking investors to back its $109 billion plan to create a solar sector capable of providing 30 percent of its electricity by 2032. The plan or the roadmap aims to install 23.9 gigawatts (GW) of renewable power capacity by 2020 and 54.1 GW by 2032.

Saudi Arabia wants most of the new renewable energy capacity to come from two solar power technologies, but is also seeking to generate electricity from wind, geothermal and waste-to-energy projects.

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