Saudi Arabia
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ECONOMY
Saudi Arabia's economy is petroleum-based; roughly 75% of budget revenues and 90% of export earnings come from the oil industry. The oil industry comprises about 45% of Saudi Arabia's gross domestic product, compared with 40% from the private sector (see below). Saudi Arabia has claimed to be in possession of 260.1 billion barrels of oil reserves (about 24% of the world's proven total petroleum reserves) as of 2003. Moreover, according to the Saudi government, the proven reserves increase gradually as more oil fields are discovered, unlike most other oil-producing countries. It must be noted, however, that, those figures have been contested and that Saudi Arabia's actual reserves may be notably lower. Saudi Arabia was a key player in the successful efforts of OPEC and other oil producing countries to raise the price of oil in 1999 to its highest level since the Gulf War by reducing production.

The government is attempting to promote growth in the private sector by privatizing industries such as power and telecom. Saudi Arabia announced plans to begin privatizing the electricity companies in 1999, which followed the ongoing privatization of the telecommunications company. Shortages of water and rapid population growth may constrain government efforts to increase self-sufficiency in agricultural products.

In the 1990s, Saudi Arabia experienced a significant contraction of oil revenues combined with a high rate of population growth. Per capita income has fallen from $25,000 in 1980 to $8,000 in 2003, up from about $7,000 in 1999. The decline in inflation-adjusted per-capita income from 1980 to 1999 set a record, being by far the worst such decline suffered by any nation-state in history.

In 2003, the price of oil jumped to record high of 40 to 50 dollars, which triggered a second oil boom. Saudi Arabia's budget surplus has crossed $28 billion (110SR billion) in 2005. Tadawul (the Saudi stock market Index) finished 2004 with a massive 76.23% to close at 4437.58 points. Market capitalization was up 110.14% from a year earlier to stand at $157.3 billion (589.93SR billion), which makes it the biggest stock market in the Middle East.‏

OPEC limits its members oil production based on its "proven reserves." The higher their reserves, the more OPEC allows them to produce. Because of this, Saudi Arabia does not allow independent verification of their claimed "proven reserves." Over the past fifteen years, Saudi Arabia's claimed reserves have been flat, with the exception of an increase of about 100 billion barrels between 1987 and 1988.

To diversify the economy, Saudi Arabia launched a new city on the western coast with investments exceeding 26.6 billion dollars. The city which is named "King Abdullah Economic City" will be built near al-Rabegh industrial city north to Jeddah. The new city, where construction work started in December 2005, includes a port which is the largest port of the kingdom. Extending along a coastline of 35 km, the city will also include petrochemical, pharmaceutical, tourism, finance and education and research areas.

Saudi Arabia officially became a WTO member in December 2005.

SOURCE: WIKIPEDIA