Saudi Arabia

Saudi Arabia is located on the Arabian Peninsula, bordered to the north by Jordan and Iraq, to the east by the Persian Gulf, to the south by Yemen, and to the west by the Red Sea. With an area of 2,150,000 km², it is the fifth-largest country in the world and the largest in the Middle East. The capital, Riyadh, has 7 million inhabitants, making it the most populous city in the country. The total population is 35 million, with sustained demographic growth, partly due to a high birth rate.

Economic Situation

In 2023, Saudi Arabia’s GDP is estimated at around $1.07 trillion, with a projected growth of 3.1% compared to the previous year. The GDP per capita is $30,500. Exports, mainly oil, amount to $425 billion, while imports total around $140 billion, resulting in a significant trade surplus. The balance of payments recorded a surplus of $80 billion in 2023. The public deficit is estimated at $12 billion, or 1.1% of GDP. Public debt on December 31, 2023, is $220 billion, equivalent to 20% of GDP, making the fiscal situation relatively sustainable.

Inflation in 2023 stood at 3.2%, with price increases for food and building materials. Unemployment decreased to 5.6%, thanks to government efforts to promote local employment. The legal minimum wage is set at 4,000 Saudi riyals (about $1,067) per month, while the average monthly wage is about 6,000 riyals ($1,600).

Forecasts

For 2024, projections indicate an economic growth of 3.5%, supported by the continued recovery in oil prices and the expansion of the non-oil sector, particularly in technology and renewable energy. However, challenges such as high youth unemployment and the need to diversify the economy remain significant.

Country Risk

Saudi Arabia presents a medium country risk, with political stability assured by the absolute monarchy but concerns related to human rights and regional tensions. Dependence on oil and fluctuations in the energy market represent significant risks to economic stability.

Foreign Direct Investments

In 2022, foreign direct investments (FDI) in Saudi Arabia exceeded $19 billion, an increase of 15% compared to the previous year. Key sectors attracting FDI include energy, infrastructure, and technology. Major investors come from the United Arab Emirates, the United States, and China. The Saudi government is actively promoting policies to attract investments in line with Vision 2030, an ambitious plan to diversify the economy.

Geopolitical Analysis

Role in the Middle East

Saudi Arabia is a key player in the Middle East geopolitical landscape, not only because of its vast oil reserves but also due to its leadership role in the Islamic world. The kingdom hosts the holy cities of Mecca and Medina, making it a reference point for Muslims worldwide. The Saudi monarchy pursues an active foreign policy and has frequently sought to exert its influence through strategic alliances, particularly with the United States and Gulf monarchies.

Relations with the United States

Traditionally, Saudi Arabia has maintained strong relations with the United States, based on economic and strategic interests. The U.S. is one of the main buyers of Saudi oil and provides military and technological support. However, tensions have risen in recent years, particularly regarding human rights and Saudi regional policies, such as the war in Yemen. Global events, such as China’s emergence as an economic power, are prompting Riyadh to reconsider its alliances and seek a balance between the West and emerging powers.

Regional Influence and Conflicts

Saudi Arabia is involved in several regional conflicts, often in opposition to Iran, with which it competes for influence in the Middle East. The rivalry between Riyadh and Tehran manifests in various theaters, including Yemen and Syria, where the Saudi kingdom has supported anti-Iranian groups. Regional security is a priority for the Saudi government, which invests heavily in military capabilities and alliances with Western powers.

Economic Diversification Strategy

Vision 2030 is Saudi Arabia’s strategic plan to diversify the economy and reduce its dependence on oil. This includes significant investments in sectors such as tourism, technology, and renewable energy. The government is seeking to attract foreign investments and develop a more robust private sector, creating job opportunities for a growing young population. However, the success of this strategy depends on political stability and security in the region.

Internal Challenges and Human Rights

Despite economic stability, Saudi Arabia faces significant internal challenges, including high youth unemployment and limitations on civil liberties. The government has implemented some social reforms, such as allowing women to drive, but criticism regarding political repression and human rights remains a sore point, influencing international relations and the kingdom’s global reputation.