Saudi Arabia

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Saudi Arabia is the world’s largest oil producer and exporter with almost one-fifth of the word’s proven oil reserves. Benefiting from abundant and cheap energy, the industrial sector has gained a leading position, notably in the petrochemical sector. Economic activity remains linked to oil revenues. The surge in US shale oil production has challenged the leading role of Saudi Arabia in the oil market until 2019.

Public debt is increasing and is largely compensated by public external assets (roughly equivalent to GDP). The SAR peg to the USD is strong. The country faces two important challenges in the medium and long term: to create enough private sector jobs for a large and growing population, and to reduce domestic energy consumption in order to preserve the oil export capacity. A national transformation plan (Vision 2030) is expected to accelerate the pace of reform and create new economic opportunities outside the hydrocarbon sector, notably with the development of new cities and of the service sector. The sovereign fund PIF is expected to partially finance those investments. Given the economic rigidity in Saudi Arabia, especially in the employment market, and limited economic competitiveness outside its energy-intensive industries, economic diversification is expected to progress very slowly.

Saudi Arabia is a member of the Gulf Cooperation Council (GCC) and the Organisation of Petroleum Exporting Countries (OPEC).