Saudi Arabia, situated in the heart of the Arabian Peninsula, has emerged as a key player on the global economic stage, with a diverse range of industries driving its economic prowess. From the globally influential energy sector to the resilient real estate market, robust automotive industry, mineral wealth, and agricultural advancements, each sector contributes significantly to the nation’s economic vibrancy and diversification.
Major Industries in Saudi Arabia
Oil and Gas Industry
Saudi Arabia ranked as the world’s second-largest oil producer, possesses the second-largest proven oil reserves, estimated at around 260 billion barrels, constituting a quarter of the global reserves. Notably, Saudi Arabia’s petroleum resources are not only abundant but also conveniently situated close to the Earth’s surface, rendering exploration and drilling operations cost-effective. The country holds the position of the leading oil exporter globally and boasts the fifth-largest natural gas reserves on the planet. The petroleum industry plays a pivotal role in Saudi Arabia’s economic landscape, contributing approximately 90% to export earnings and 87% to the national budget revenue. It also constitutes a substantial 45% of the country’s nominal GDP. Saudi Arabia’s participation in OPEC further solidifies its commitment to coordinated oil production, aligned with the organization’s framework that caps production based on proven reserves among member states.
In addition to its significant oil and gas reserves, Saudi Arabia possesses the world’s second-most valuable natural resources, encompassing both ferrous and non-ferrous minerals. The country is rich in industrial minerals, including bauxite, phosphate, limestone, potash, glass sand, gypsum, and perlite. Furthermore, explorations have unveiled precious metals such as gold and silver. Gold deposits are distributed across approximately 53 locations, with Mahd adh Dhahab emerging as the primary gold mining area. Silver, on the other hand, is commonly found in the northeastern region, particularly in proximity to Samra, Umm Al-Hadid, Nugrah, and Umm Al-Qusor. The Central region hosts copper alongside zinc, while iron ore deposits are prevalent in the Swawin region. These diverse mineral resources have played a pivotal role in fostering the establishment of factories, laboratories, and quarries in the country.
The real estate sector stands out as one of the rapidly advancing segments in the Saudi Arabian economy, demonstrating resilience even in the face of economic challenges. This growth is attributed, in part, to the implementation of Real Estate Investment Trusts (REITs). With transactions valued at approximately US$75 billion in 2016, real estate significantly contributes to the non-oil economy.
The residential sector, experiencing a consistent growth rate of 5.7% since 2004, is anticipated to maintain its upward trajectory. The sector’s expansion has attracted major real estate consultancies, including Knight Frank and Jones Lang LaSalle, establishing their presence in the country.
Saudi Arabia has witnessed advancements in its agricultural sector, overcoming the challenge of being predominantly desert terrain. Certain regions within the country benefit from favourable climates for agricultural activities. The focus of Saudi agriculture primarily lies in exporting products like dairy, dates, eggs, poultry, vegetables, fruits, and flowers to neighbouring markets, as the nation attains self-sufficiency in producing these commodities. In the 1980s, the Saudi Arabian government initiated substantial reforms in agriculture, aiming to enhance rural income and achieve greater food self-sufficiency. Historically, agricultural endeavours were limited to specific areas, with the produce primarily serving local communities. However, recognizing the increasing significance of agriculture to the national economy, the government has significantly expanded the land under cultivation.
Despite economic challenges, the automotive industry in Saudi Arabia has demonstrated notable resilience, with several companies, including Suzuki Motors, consistently achieving positive results in both sales and volumes. Saudi Arabia stands as one of the Middle East’s most significant automotive markets, and it holds the distinction of being the largest auto spare market in the Gulf region. Revenues generated from various components such as batteries, tires, lubricants, and engine parts surpass the US$7 billion mark. Additionally, the country boasts aircraft and commercial repair facilities as part of its automotive infrastructure.