Saudi Arabia is the largest country in the Gulf region with a population of 32 million, and the largest economy in the Arab World with a GDP of USD 683.7 billion. Saudi Arabia has almost 16 percent of the world's proven petroleum reserves.
Saudi Arabia is the second-largest U.S. goods export market in the Gulf region behind the UAE.
The Saudi Arabian Government (SAG) exercises control over main economic activities of the country’s oil-based economy. According to Forbes Magazine, petroleum accounts for roughly 87 percent of budget revenues, 42 percent of GDP, and 90 percent of export earnings.
To diversify its economy away from oil, in 2016 the SAG launched a broad and ambitious socio-economic reform plan known as Vision 2030. The program is aimed at diversifying the economy, creating private sector jobs for a growing population, and placing government finances on a sounder footing. Vision 2030’s most significant goals and targets to be achieved by 2020 include: spurring private sector growth; increasing local content requirements in manufacturing, particularly in defense equipment and basic materials; enhancing Saudi government efficiencies; improving the provision of government services; increasing revenue generation through new taxes; transforming the Public Investment Fund (PIF) into the world’s largest sovereign wealth fund; providing affordable housing to citizens; developing Saudi Arabia’s capital markets; building a renewable energy sector; attracting greater foreign direct investment; privatizing dozens of government entities; expanding the ICT sector; further developing the mining sector; accelerating the development of the public transportation and the railway network; building an effective domestic tourism infrastructure; and expanding natural gas and petrochemical production.
On January 1, 2018, an across-the-board value-added tax (VAT) of five percent was introduced and the government started charging employers a monthly fee for each expatriate worker they employ.
U.S. goods exports in 2017 totaled USD 16.3 billion (down nine percent from 2016). U.S. imports from Saudi Arabia totaled USD18.9 billion, resulting in a goods trade deficit of USD 2.5 billion. Major U.S. export products include: transportation equipment (including aircraft but excluding rail) (USD 6.2 billion); machinery (except electrical) (USD 2.2 billion); electric machinery (USD 1.6 billion); optic, photo, medical instruments (USD 0.6 billion), chemicals (USD 0.4 billion); plastics and articles thereof (USD 0.3 billion), and pharmaceutical products (USD 0.2 billion). U.S. exports of services in 2017 reached USD 9.2 billion, which is a trade surplus of almost USD 8 billion. [Global Trade Atlas; U.S. Census]
In 2016, U.S. exports of consumer-oriented food products to Saudi Arabia declined by approximately 11 percent to USD 508 million. Saudi Arabia is the largest importer of food and agricultural products in the Gulf Cooperation Council (GCC). The latest available U.N. trade data show Saudi Arabia imported USD 14.8 billion of agricultural and related products in 2016, a decline of approximately 23 percent from imports in 2015. This decline was mostly due to lower prices of grains, such as corn, wheat, barley and rice, and lower imported quantities of dairy product and frozen broiler meat. In 2016, Saudi Arabia imported approximately USD 7.8 billion of consumer-oriented food products, a 20 percent decrease from 2015. U.S. food products are generally viewed as meeting higher quality standards compared to those produced locally or imported from other countries. Although U.S. food products command higher price margins compared to imports from Asia and Arab countries, demand for U.S. food products in the Saudi market has been increasing in the past few years.
The Saudi market can be very sensitive to branding and materials content. U.S. companies are encouraged to familiarize themselves with Saudi traditions, customs, and strict observances of the Islamic faith to ensure that branding does not unintentionally offend local norms and practices.
MISCELLANEOUS INVESTMENT FACTS
Saudi Arabia was the United States' 20th largest goods export market in 2017.
U.S. goods exports to Saudi Arabia in 2017 were $16.3 billion, down 9.2% ($1.7 billion) from 2016 but up 57.3% from 2007. U.S. exports to Saudi Arabia account for 1.1% of overall U.S. exports in 2017.
The top export categories (2-digit HS) in 2017 were: aircraft ($3.6 billion), vehicles ($2.6 billion), machinery ($2.2 billion), electrical machinery ($1.6 billion), and arms and ammunition ($1.4 billion).
U.S. total exports of agricultural products to Saudi Arabia totaled $1.5 billion in 2017. Leading domestic export categories include: corn ($266 million), tree nuts ($114 million), hay ($110 million), vegetable oils (ex. soybean) ($96 million), and rice ($88 million).
U.S. exports of services to Saudi Arabia were an estimated $9.2 billion in 2017, 1.7% ($155 million) less than 2016, but 105% greater than 2007 levels. Leading services exports from the U.S. to Saudi Arabia were in the travel, maintenance and repair services, and technical and other services sectors.
Legal & Political
The SAG is adopting progressively stricter quotas for hiring Saudi nationals. U.S. companies report increasing difficulties obtaining visas for expatriate professional employees. Firms also may face challenges in finding sufficient numbers of qualified Saudi nationals to fill particular jobs.
Treaties & Agreements
The United States and Saudi Arabia enjoy a strong economic relationship, as the United States is Saudi Arabia's largest trading partner, and Saudi Arabia is one of the United States’ largest trading partners in the Middle East. Saudi Arabia is the second leading source of imported oil for the United States, providing more than one million barrels per day of oil to the U.S. market. The United States and Saudi Arabia have signed a Trade Investment Framework Agreement. Saudi Arabia launched its Vision 2030 program in April 2016, laying out plans to diversify the economy, including through increased trade and investment with the United States and other countries.
Saudi Arabia participates in a number of international organizations, including the United Nations, International Monetary Fund, World Bank, and World Trade Organization. Saudi Arabia also is an observer to the Organization of American States.