Economics Analysis of Australia & Saudi Arabia of last 20 years, since 1991
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Economics Analysis of Australia & Saudi Arabia of last 20 years, since 1991

on

  • 993 views

Detailed Introduction and Economic Analysis and Comparison of Economies of Australia and Saudi Arabia of the last two decades with the help of graphs.

Detailed Introduction and Economic Analysis and Comparison of Economies of Australia and Saudi Arabia of the last two decades with the help of graphs.

Statistics

Views

Total Views
993
Views on SlideShare
993
Embed Views
0

Actions

Likes
1
Downloads
27
Comments
1

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Economics Analysis of Australia & Saudi Arabia of last 20 years, since 1991 Document Transcript

  • 1. ECONOMIC of OUTLOOK AUSTRALIA & SAUDI ARABIA An economic analysis of last two decades
  • 2. ECONOMIC OUTLOOK OF AUSTRALIA & SAUDI ARABIA Rehan Muhammad Nasir 2 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 3. Dedication To those who once again made an enormous contribution to the writing of this report 3 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 4. ACKNOWLEDGEMENT Alhumdullillah, first of all we would like to thank Allah Almighty as finally we were able to finish our report that have been given by Development of Economics lecturer to us. This task had been done with all effort by group members even though problems were happened among us while doing this assignment. Luckily all the problems could be settle down and we were able to adapt properly and wisely On the other hand, big thank we also address to our Development of Economic lecturer Madam Ayesha that always teach us and guide us to understand the things that we should know while studying Economics and also in producing good project work. She always gives us supports and guide to us how to do our assignment in purpose to produce a good outcome from research that been studied. Finally, thank to our beloved friends that always stick together and also work hard to produce a good assignment with all effort and responsibility. Hope that all the effort will give a lot of benefits to us and also to our group project. 4 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 5. PREFACE The purpose of this report is to compare Australia and Saudi Arabia in all sorts of economic levels to show what factors are responsible for and why these countries are at different ranks in the world. We have taken the major indicators to compare both the countries and figure out why both falls in different categories that is developed and developing. The introduction and history till conclusion is full of knowledge and discussion of both the countries and the informative graphs and data of the two decades make it easy to understand the factors that involve in the development of a country. 5 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 6. TABLE OF CONTENTS Section # 01 Brief Overview of Australia History, Australia Today, Government……………………………………………….. States and Territories, Foreign Relation and Military……….……….……….………. Geography, Health, Tourism, Economy……….……….……….……….……….…… 09 10 11 Section # 02 Economic Analysis of Australia Real GDP, GDP per Capita, Population……….……….……….……….……….…... Unemployment, Age Dependency, Inflation Rate……….……….……….………….. Exchange Rate, Stock Market Capitalization, Government Revenue……….………. Government Spending, Net Debts, Agriculture Share of GDP……….……….……… Industry Share of GDP, Service Share of GDP, Imports.……….… .……….………. Exports, Reserve Assets, Trade Balance.……….… .……….… .……….… .……… 14 15 16 17 18 19 Section # 03 Brief Overview of Saudi Arabia History, Administrative divisions, Geography & Population.……….… .……….….. Political Overview.……….… .……….… .……….… .……….… .……….… .…… Economic Overview.……….… .……….… .……….… .……….… .……….……… Infrastructure Development, Foreign relations, Military, Education.……….… …… Islamic Heritage Sites.……….… .……….… .……….… .……….… .……….……. 20 21 22 24 25 Section # 04 Economic Analysis of Saudi Arabia Real GDP, Inflation Rate.……….… .……….… .……….… .……….… .……….… GDP per Capita, Population, Unemployment Rate.……….… .……….… .………… Age Dependency Ratio, Exchange Rate, Stock Market Capitalization.……….……. Government Revenues, Net Debts.……….… .……….… .……….… .……….…… Government Spending, Agri Share of GDP, Industry Share of GDP.……….… …… Service Share of GDP, Imports, Exports.……….… .……….… .……….… .……… Reserve Assets, Balance of Trade.……….… .……….… .……….… .……….……. 26 27 28 29 30 31 32 Section # 05 Similarities Between Australia And Saudi Arabia Both Are Oceanic Countries And Have Ports For Shipping.……….… .……….…… Both Are Dependent In Some Factors.……….… .……….… .……….… .………… Both do Import and Export.……….… .……….… .……….… .……….… .……….. Major Importers.……….… .……….… .……….… .……….… .……….… .……… 6 33 33 33 34 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 7. TABLE OF CONTENTS Both have Well-built Infra-structure.……….… .……….… .……….… .……….… Both Have Political Stability.……….… .……….… .……….… .……….… .…….. Both have free floating exchange rates.……….… .……….… .……….… .………. Both Have Desert Areas.……….… .……….… .……….… .……….… .…………. Bilateral Relationship.……….… .……….… .……….… .……….… .……….…… Both Show Improvements and Variations in Indicators Since 1991 till 2011.……... 34 34 34 34 34 35 Section # 06 Economic Comparison of Australia And Saudi Arabia Real GDP, GDP per Capita.……….… .……….… .……….… .……….… .……… Population Unemployment.……….… .……….… .……….… .……….… .………. Age Dependency, Inflation Rate.……….… .……….… .……….… .……….… .… Exchange Rate, Stock Market Capitalization.……….… .……….… .……….… .… Government Revenue.……….… .……….… .……….… .……….… .……….… ... Government Spending, Net Debts.……….… .……….… .……….… .……….……. Imports, Exports.……….… .……….… .……….… .……….… .……….… .……… Reserve Assets, Trade Balance.……….… .……….… .……….… .……….……….. Section # 07 Conclusion Conclusion.……….… .……….… .……….… .……….… .……….… .……….…… 7 36 37 38 39 40 41 42 43 45 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 8. This page intentionally left blank 8 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 9. Brief Overview of Australia History In 1606, Dutch explorers were the first Europeans who discovered Australia, but they did not settle there. Before this, for thousands of years, Australia was inhabited by the Aborigines. In 1770, the British claimed the eastern part of Australia. It was a useful place to send British convicts, instead of keeping them in prison in England. Gradually, other immigrants moved to Australia and the population grew. New South Wales was the first colony and five others New South Wales was the first colony and five others were established in the 19th century. The six colonies joined together on January 1st 1901, to form the Commonwealth of Australia. Australia Today The population today is just over 21.7 million. The nation's capital city is Canberra. The other main cities are: Sydney, Melbourne, Brisbane, Perth and Adelaide. 60% of the population live in and around these cities. Australia has a democratic political system and a high technology industry. Australia is a country in Oceania bordering the Indian Ocean and the Southern Pacific Ocean. Australia is comprised of mainland Australia, the island of Tasmania and several small islands in the Indian and Pacific Oceans. The terrain is mostly low plateau with deserts. The government system is a federal parliamentary democracy and a Commonwealth realm. The chief of state is the Queen and the head of government is the Prime Minister. Australia has a mixed economic system in which the economy includes a variety of private freedom, combined with centralized economic planning and government regulation. Australia is a member of Asian Pacific Economic Cooperation (APEC). Government Australia is a constitutional monarchy with a federal division of powers. It uses a parliamentary system of government with Queen Elizabeth II at its apex as the Queen of Australia, a role that is distinct from her position as monarch of the other Commonwealth realms. The Queen resides in the United Kingdom, and she is represented by her viceroys in Australia (the Governor-General at the federal level and by the Governors at the state level), who by convention act on the advice of her ministers. Supreme executive authority is vested by the Constitution of Australia in the sovereign, but the power to exercise it is conferred by the Constitution specifically on the Governor-General. The most notable exercise to date of the Governor-General's reserve powers outside the Prime Minister's request was the dismissal of the Whitlam Government in the constitutional crisis of 1975. 9 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 10. The federal government is separated into three branches: • • • The legislature: the bicameral Parliament, defined in section 1 of the constitution as comprising the Queen (represented by the Governor-General), the Senate, and the House of Representatives; The executive: the Federal Executive Council, in practice the Governor-General as advised by the Prime Minister and Ministers of State The judiciary: the High Court of Australia and other federal courts, whose judges are appointed by the Governor-General on advice of the Council. States and territories Australia has six states—New South Wales (NSW), Queensland (QLD), South Australia (SA), Tasmania (TAS), Victoria (VIC) and Western Australia (WA)—and two major mainland territories—the Australian Capital Territory (ACT) and the Northern Territory (NT). In most respects these two territories function as states, but the Commonwealth Parliament can override any legislation of their parliaments. By contrast, federal legislation overrides state legislation only in areas that are set out in Section 51 of the Australian Constitution; state parliaments retain all residual legislative powers, including those over schools, state police, the state judiciary, roads, public transport and local government, since these do not fall under the provisions listed in Section 51. Each state and major mainland territory has its own parliament—unicameral in the Northern Territory, the ACT and Queensland—and bicameral in the other states. The states are sovereign entities, although subject to certain powers of the Commonwealth as defined by the Constitution. The lower houses are known as the Legislative Assembly (the House of Assembly in South Australia and Tasmania); the upper houses are known as the Legislative Council. The head of the government in each state is the Premier and in each territory the Chief Minister. The Queen is represented in each state by a Governor; and in the Northern Territory, the Administrator. In the Commonwealth, the Queen's representative is the Governor-General. Foreign relations and military Over recent decades, Australia's foreign relations have been driven by a close association with the United States through the ANZUS pact, and by a desire to develop relationships with Asia and the Pacific, particularly through ASEAN and the Pacific Islands Forum. In 2005 Australia secured an inaugural seat at the East Asia Summit following its accession to the Treaty of Amity and Cooperation in Southeast Asia, and in 2011 attended the Sixth East Asia Summit in Indonesia. Australia is a member of the Commonwealth of Nations, in which the Commonwealth Heads of Government meetings provide the main forum for co-operation. In the 2010–11 budget, defense spending was A$25.7 billion, representing the 13th largest defense budget. Australia has been involved in UN and regional peacekeeping, disaster relief and armed conflict; it currently has deployed approximately 3,330 defense force personnel in varying capacities to 12 international operations in areas including East Timor, Solomon Islands and Afghanistan. 10 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 11. Geography Australia's landmass of 7,617,930 square kilometers (2,941,300 sq mi) is on the Indo-Australian Plate. Surrounded by the Indian and Pacific oceans, it is separated from Asia by the Arafura and Timor seas, with the Coral Sea lying off the Queensland coast, and the Tasman Sea lying between Australia and New Zealand. The world's smallest continent and sixth largest country by total area, Australia—owing to its size and isolation—is often dubbed the "island continent", and is sometimes considered the world's largest island. Australia has 34,218 kilometers (21,262 mi) of coastline (excluding all offshore islands), and claims an extensive Exclusive Economic Zone of 8,148,250 square kilometers (3,146,060 sq mi). This exclusive economic zone does not include the Australian Antarctic Territory. Excluding Macquarie Island, Australia lies between latitudes 9° and 44°S, and longitudes 112° and 154°E. Health Total expenditure on health (including private sector spending) is around 9.8% of GDP. Australia introduced universal health care in 1975. Known as Medicare, it is now nominally funded by an income tax surcharge known as the Medicare levy, currently set at 1.5%. The states manage hospitals and attached outpatient services, while the Commonwealth funds the Pharmaceutical Benefits Scheme (subsidizing the costs of medicines) and general practice. Tourism Tourism is an important industry for the Australian economy. In the financial year 2010/11, the tourism industry represented 2.5% of Australia's GDP at a value of approximately A$35 billion to the national economy. This is equivalent to tourism contributing $94.8 million a day to the Australian economy. Domestic tourism is a significant part of the tourism industry, and was responsible for 73% of the total direct tourism GDP. The 2010-11 financial year saw a record number of overseas arrivals in the financial year, with 5.9 million short-term visitor arrivals to Australia (or 588 extra visitors a day extra). Tourism employed 513,700 people in Australia in 2010-11, or which 43.7% of total tourism employed persons were part-time. Tourism also contributed 8.0% of Australia's total export earnings in 2010-11. Economy Most of the rich farmland and good ports are in the east and particularly the southeast, except for the area around Perth in Western Australia. Melbourne, Sydney, Brisbane, and Adelaide are the leading industrial and commercial cities. There was considerable industrial development in the last two decades of the 20th cent. While the Australian economy fell into a severe recession in the late 1980s, it experienced an extended period of growth beginning in the 1990s. It then suffered somewhat from the Asian economic slump of the 1990s and from the "Big Dry" drought of the early 21st cent., while also benefiting from increased mineral exports to China during the same period. 11 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 12. Australia is highly industrialized, and manufactured goods account for most of the gross domestic product. Its chief industries include mining, food processing, and the manufacture of industrial and transportation equipment, chemicals, iron and steel, textiles, machinery, and motor vehicles. Australia has valuable mineral resources, including coal, iron, bauxite, copper, tin, gold, silver, uranium, nickel, tungsten, mineral sands, lead, zinc, natural gas, and petroleum; the country is an important producer of opals and diamonds. The country is self-sufficient in food, and the raising of sheep and cattle and the production of grain have long been staple occupations. Tropical and subtropical produce—citrus fruits, sugarcane, and tropical fruits—are also important, and there are numerous vineyards and dairy and tobacco farms. Australia maintains a favorable balance of trade. Its chief export commodities are metals, minerals, coal, wool, beef, mutton, cereals, and manufactured products. The leading imports are machinery, transportation and telecommunications equipment, computers and office machines, crude oil, and petroleum products. Australia's economic ties with Asia and the Pacific Rim have become increasingly important, with China, Japan, and the United States being its main trading partners. In May 2012, there were 11,537,900 people employed (either full- or part-time), with an unemployment rate of 5.1%. Youth unemployment (15–24) stood at 11.2%. The Hawke Government floated the Australian dollar in 1983 and partially deregulated the financial system. The Howard Government followed with a partial deregulation of the labor market and the further privatization of state-owned businesses, most notably in the telecommunications industry. The indirect tax system was substantially changed in July 2000 with the introduction of a 10% Goods and Services Tax (GST). In Australia's tax system, personal and company income tax are the main sources of government revenue. Ranked third in the Index of Economic Freedom (2010), Australia is the world's twelfth largest economy and has the fifth highest per capita GDP (nominal) at $66,984. The country was ranked second in the United Nations 2011 Human Development Index and first in Legatum's 2008 Prosperity Index. All of Australia's major cities fare well in global comparative livability surveys; Melbourne reached first place on The Economist's 2011 and 2012 world's most livable cities lists, followed by Sydney, Perth, and Adelaide in sixth, eighth, and ninth place respectively. Total government debt in Australia is about $190 billion – 20% of GDP in 2010. Australia has among the highest house prices and some of the highest household-debt levels in the world. An emphasis on exporting commodities rather than manufactured goods has underpinned a significant increase in Australia's terms of trade since the start of the 21st century, due to rising commodity prices. Australia has a balance of payments that is more than 7% of GDP negative, and has had persistently large current account deficits for more than 50 years. Australia has grown at an average annual rate of 3.6% for over 15 years, in comparison to the OECD annual average of 2.5%. Australia was the only advanced economy not to experience a recession due to the global financial downturn in 2008–2009. However, the economies of six of Australia's major trading partners have been in recession, which in turn has affected Australia, significantly hampering its economic growth in recent years. From 2012 to early 2013, Australia's national economy grew, but some non-mining states and Australia's non-mining economy experienced a recession. Over the past decade, inflation has typically been 2–3% and the base interest rate 5–6%. The service sector of the economy, including tourism, education, and financial services, accounts for 12 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 13. about 70% of GDP. Rich in natural resources, Australia is a major exporter of agricultural products, particularly wheat and wool, minerals such as iron-ore and gold, and energy in the forms of liquefied natural gas and coal. Although agriculture and natural resources account for only 3% and 5% of GDP respectively, they contribute substantially to export performance. Australia's largest export markets are Japan, China, the US, South Korea, and New Zealand. Australia is the world's fourth largest exporter of wine, and the wine industry contributes $5.5 billion per year to the nation's economy. 13 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 14. Economic Analysis of Australia Real GDP Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. The GDP of Australia of 2012 is 1.521 trillion US$, with 3.4% growth rate and in 2011 was 1.3557 trillion US$. GDP per Capita in USD GDP per capita is a measurement of how prosperous a country feels to each of its citizens. GDP per capita takes a country's production, as measured by GDP, and divides it by the country's total population. Hence, it is the output of a country's economy per person. The GDP per capita in Australia of 2012 is 67,035.57 US$ and in 2011 was 62,003 US$. Population The population of Australia till the end of 2012 is 22.68 million with the growth rate of 1.6% of previous year, and in 2011 was 22.51 million. 14 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 15. Unemployment Rate On 12 September 2013 Australia's unemployment rate increased to 5.8 per cent in August 2013. The ABS (Australia Bureau of Statistics) reported the number of people employed decreased by 10,800 to 11,637,100 in August. The decrease in employment was due to decreased part-time employment, down 8,200 to 3,508,300 and full-time employment, down 2,600 people to 8,128,800. The decrease in total employment was mainly driven by a decrease in male full-time employment and a decrease in female part-time employment. The number of people unemployed increased by 9,400 people to 714,100 in August, the ABS reported. Age Dependency Ratio Age dependency ratio is the ratio of dependents--people younger than 15 or older than 64--to the working-age population--those ages 15-64. Data are shown as the proportion of dependents per 100 working-age population. The latest value for Age dependency ratio (% of working-age population) in Australia was 48.39 as of 2011. Over the past 51 years, the value for this indicator has fluctuated between 63.33 in 1961 and 47.70 in 2009. Inflation Rate The inflation rate in Australia was recorded at 2.40 percent in the second quarter of 2013. Inflation Rate in Australia is reported by the Australian Bureau of Statistic. From 1951 until 2013, Australia Inflation Rate averaged 5.3 Percent reaching an all-time high of 23.9 Percent in December of 1951 and a record low of -1.3 Percent in June of 1962. In Australia, the inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods. 15 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 16. Exchange Rate In most financial papers, currencies are expressed in terms of U.S. dollars, while the dollar is commonly compared to the Other Currencies. The exchange rate of one U.S. dollar for one Australian dollar was about 0.94 on October 5, 2013, which means that one dollar can be exchanged for 0.94 AUS $. Stock Market Capitalization Stocks in Australia had a positive performance during the last month. Australia Stock Market (S&P/ASX 200), rallied 64 points or 1.31 percent during the last 30 days. From 1992 until 2013, Australia Stock Market (S&P/ASX 200) averaged 3536 Index points reaching an alltime high of 6829 Index points in November of 2007 and a record low of 1359 Index points in November of 1992. The S&P/ASX 200 is the most important stock market index which tracks the performance of 200 large companies based in Australia. It is a market-capitalization weighted and float-adjusted index. The index has a base value of AUD3133.3, equal to the value of the All Ordinary Shares as of March 31, 2000. Government Revenues A feature of the Australian federal system is that the Commonwealth Government levies and collects all income tax, from individuals as well as from enterprises. It also collects a portion of other taxes, including taxes on the provision of goods and services. The revenue base of state governments consists of taxes on property, on employers' payroll, and on the provision and use of goods and services. The sole source of taxation revenue for local governments is taxes on property. Taxes on income increased $26,310m (13%) while taxes on 16 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 17. property increased $286m (1%) and taxes on provisions of goods and services increased $2,172m (2%). Taxes on income represented 59% of total taxation revenue for all levels of government and taxes on provision of goods and services, including the goods and services tax (GST) represented 24%. Government Spending’s The charts below summaries Australian Government expenses for 1991-2011 on an accrual basis. Total expenses for 20122013 are expected to be $376.3 billion, a decrease of 1.0 per cent on estimated expenses since the Mid-Year Economics and Fiscal Outlook 2011-12. Net Debts Australia recorded a Government Debt to GDP of 20.70 percent of the country's Gross Domestic Product in 2012. Government Debt To GDP in Australia is reported by the AOFM, Australia. From 1991 until 2011, Australia Government Debt To GDP averaged 40.72 Percent reaching an all-time high of 31.7 Percent in December of 1995 and a record low of 9.7 Percent in December of 2007. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. Agriculture Share of GDP The Agriculture; value added (% of GDP) in Australia was last reported at 4% of GDP as on February 21, 2013, according to a CIA. 17 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 18. Industry GDP Share of The Industry Share of GDP in Australia was last reported at 26.6% as on February 21, 2013, according to a CIA. Services Industry Share of GDP The Services Industry Share of GDP in Australia was last reported at 69.4% as on February 21, 2013, according to a CIA. Imports in Millions $ The imports of Australia according to the Department of Foreign Affairs and Trade of Australia is 242,088 A$ millions in 2012. Major Australian imports, 2012 (A$m) (e): Crude petroleum Passenger motor vehicles Refined petroleum Telecom equipment & parts Goods vehicles 18 21,581 16,917 15,875 8,748 8,559 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 19. Exports in Millions $ The exports of Australia according to the Department of Foreign Affairs and Trade of Australia is 248,150 A$ millions in 2012 Major Australian exports, 2012 (A$m) (e): Iron ores concentrates Coal Gold Natural gas Crude petroleum & 54,788 41,264 15,525 13,467 10,935 Reserve Assets in Billions USD Australia’s case, reserve assets include monetary gold, Special Drawing Rights, reserve position in the IMF, and foreign exchange (currency, deposits and debt securities) held by the Reserve Bank as part of Australia’s official reserve assets. Trade Balance in Billions USD Australia has an adverse trade balance since the last decade of the 20th century till 2010. It achieves the positive trade balance in 2011. It has adverse trade balance in the last year in services but in goods it has positive trade balance in 2012. 19 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 20. Brief Overview of Saudi Arabia History Saudi Arabia is the largest Arab state in Western Asia by land area (approximately 2,150,000 km2 (830,000 sq mi), constituting the bulk of the Arabian Peninsula) and the second-largest in the Arab world (after Algeria). It is bordered by Jordan and Iraq to the north, Kuwait to the northeast, Qatar, Bahrain and the United Arab Emirates to the east, Oman to the southeast, Yemen in the south, the Red Sea to the west and Persian Gulf to the east. Its population is estimated to consist of 16 million citizens and an additional 9 million registered foreign expatriates and 2 million illegal immigrants. The Kingdom of Saudi Arabia was founded by Abdul-Aziz bin Saud (known for most of his career as Ibn Saud) in 1932, although the conquests which eventually led to the creation of the Kingdom began in 1902 when he captured Riyadh, the ancestral home of his family, the House of Saud, referred to in Arabic as Al Saud. The regime has been an absolute monarchy since its inception. It describes itself as being Islamic and is highly influenced by Wahhabism. Saudi Arabia is sometimes called "the Land of the Two Holy Mosques" in reference to Al-Masjid alHaram (in Mecca), and Al-Masjid al-Nabawi (in Medina), the two holiest places in Islam. Saudi Arabia has the world's 2nd largest oil reserves, which are concentrated largely in the Eastern Province. Oil accounts for more than 95% of exports and 70% of government revenue, although the share of the non-oil economy has been growing recently. This has facilitated the transformation of an underdeveloped desert kingdom into one of the world's wealthiest nations. Vast oil revenues have permitted rapid modernisation, such as the creation of a welfare state. It has also the world's sixth largest natural gas reserves. Saudi Arabia is the only country in the world which bans women from driving. Administrative divisions Saudi Arabia is divided into 13 provinces (manatiq idāriyya, – singular mintaqah idariyya). The provinces are further divided into 118 governorates (Arabic: manatiq idāriyya,. This number includes the 13 provincial capitals, which have a different status as municipalities (amanah) headed by mayors (amin). The governorates are further sudivided into sub-governorates (marakiz, sing. markaz). Geography & Population The Kingdom of Saudi Arabia lies between the Red Sea and the Arabian Gulf, and has a land mass about the size of Western Europe. It contains the world's largest continuous sand desert, 20 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 21. known as the Empty Quarter, and it is the biggest and most dominant country of the Arabian Peninsula. Saudi Arabia is bordered by Jordan to the north; Iraq and Kuwait to the northeast; Qatar and the United Arab Emirates to the east; and Yemen and the Sultanate of Oman to the south. Riyadh is the Kingdom's capital with an estimated population of over five million. All the main Saudi government offices are here. Other key cities are Jeddah, the commercial capital, located on the Red Sea coast, and Dammam on the Arabian Gulf. Political Overview Saudi Arabia is named after the ruling Al Saud family. The Kingdom was established by King Abdul Aziz bin Abdul Rahman Al Saud in 1932. Since his death in 1953, Saudi Arabia has been ruled by several of his sons, although decisions are taken by consensus within a wide circle of Princes and trusted advisors. The Kingdom is an absolute monarchy and is currently ruled by King Abdullah bin Abdul Aziz Al Saud, Custodian of the Two Holy Mosques. The King heads the government as Prime Minister and is also Commander of the Armed Forces. Crown Prince Sultan bin Abdul Aziz Al Saud is Deputy Prime Minister, Commander of the National Guard and Minister for Defense and Aviation. Executive power rests with the Council of Ministers, appointed by the King. All political parties are banned. A national Consultative Council, the Majlis Al Shura, was formed in 1993. The King appoints its members, who have advisory powers to review and provide consultation on issues of public interest. Local government is administered through general municipal councils, district councils and tribal and village councils. The country is divided into 13 provinces, with a governor and deputy governor in each one. Each province has its own council that advises the governor and deals with the development of the province. These councils deliberate on the needs of their province, work on the development budget, consider future development plans, and monitor ongoing projects. The governor and deputy governor of each province serve as chairman and vice-chairman of their respective provincial council. 21 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 22. Demand for political reform has increased in recent years, and in 2005 the country held its first elections, to elect half of the members of the municipal councils. These elections are scheduled to happen again, in late 2011. The Holy Koran is the constitution of the country and the government operates on the basis of Islamic law (Sharia). Saudi Arabia has also introduced several secular codes including Investment Fund Regulations, Tax Regulations, Insurance Regulations, and others. It is the development of these laws and their regulations which show the Government's commitment to economic diversification and private sector growth. Economic Overview With a population of over 27 million, the Kingdom of Saudi Arabia is the largest economy in the Arab world. It accounts for 25% of the Arab world's GDP. Saudi Arabia has an oil based economy with strong government controls over major economic activities. The Kingdom possesses around 25% of the world's petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. Saudi Arabia has witnessed a period of relatively high growth and economic progress over the past few years. This has been based on a strong oil sector and record oil revenues, allowing the Kingdom to increase public spending on infrastructure and welfare to match the increasing needs of a fast growing Saudi population. In turn the non-oil private sector is feeding off this upturn in public spending. In more recent years, the Saudi government has realized the need to pursue a strategy of economic diversification and reform. Reforms are underway to: Reduce reliance on gas and oil - The government is encouraging the growth of the private sector, and foreign investment through new initiatives and the opening up of previously restricted industries. Increasing employment opportunities for Saudis - Efforts are particularly focused on employing the large youth population, which generally lacks the education and technical skills the private sector needs. Riyadh has seen a substantial boost in spending on job training and education, most recently with the opening of the King Abdullah University of Science and Technology - Saudi Arabia's first co-educational university, and a new campus for Princess Nora University - a women only facility - which can take up to 50,000 students. 22 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 23. The government is also engaged in creating opportunities for young Saudis by getting foreign companies to invest in vocational and technical training. Attracting local and foreign private investment across all sectors - The government is focusing on getting private and foreign investment in ten key industries, from petrochemicals to financial services All of the above has been made easier by the Foreign Investment Act of 2000, which led to the establishment of the Saudi Arabian General Investment Agency (SAGIA). SAGIA is tasked with increasing the country's competitiveness and providing a one-stop shop for inward investment. You will find more information on their website: www.sagia.gov.sa As part of its effort to attract foreign investment, Saudi Arabia joined the WTO in December 2005 after many years of negotiations. This committed the country to further liberalization of its trading regime and the creation of a more transparent and predictable environment for trade and foreign investment, in accordance with WTO rules. The World Bank "Ease of Doing Business 2011" report saw Saudi Arabia move up to 11th in the world rankings, ahead of all other Arab and Middle Eastern countries. The Government's national budget for the 2011 fiscal year, is the largest to date, and came to a total of SR580 billion (US$154 billion ). The budget dedicates 46% of total spending to education and training, health and social development, and infrastructure. Although up 7.4% on the 2010 budget, this increase in funds is among the slowest expansion rates by the Saudi government in the past decade. It's thought that this signals an expectation from the government that the private sector can assume a larger role in the public-private investment partnership driving Saudi development as the global economy emerges from the economic downturn. It also demonstrates that the Kingdom is dedicated to continuing stimulatory spending to develop the economy and persuade private investors to do the same as they gradually emerge from a phase of deleveraging. A slowdown in the pace of budget growth, however, also signals the state's goal to rein in overspending and employ more prudent and efficient fiscal policies in the coming years. Following the political unrest in several parts of the Middle East and North Africa Region, in early 2011, King Abdullah unveiled social benefits worth US$91 billion, with decrees outlining a boost in welfare benefits, a minimum wage of SR3000 (US$800) for state employees, bonuses for public sector workers and students, and a drive to build new housing. SR250 billion (US$66.7 billion) will be spent on creating half a million housing units, and SR16 billion (US$4.3 billion) will be spent on medical facilities. 23 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 24. Infrastructure Development The Saudi population is one of the fastest growing in the world, and it is expected that there will be 29 million Saudis in 2020. 60% of Saudis are under 20 years old. Massive investment will be required to meet the needs of this growing population, creating extensive investment opportunities. Major projects in power, water, oil & gas, petrochemicals, communications, transport, mining, construction and social infrastructure add up to an estimated US$ 1,000 billion of investment opportunity over the next 20 years. Foreign relations Saudi Arabia joined the UN in 1945 and is a founder member of the Arab League, Gulf Cooperation Council, Muslim World League, and the Organization of the Islamic Conference (now the Organization of Islamic Cooperation). It plays a prominent role in the International Monetary Fund and the World Bank, and in 2005 joined the World Trade Organization. Saudi Arabia supports the intended formation of the Arab Customs Union in 2015 and an Arab common market by 2020, as announced at the 2009 Arab League summit. As a founding member of OPEC, its oil pricing policy has been generally to stabilize the world oil market and try to moderate sharp price movements so as to not jeopardize the Western economies. Military The Saudi military consists of the Royal Saudi Land Forces, the Royal Saudi Air Force, the Royal Saudi Navy, the Royal Saudi Air Defense, the Saudi Arabian National Guard (SANG, an independent military force), and paramilitary forces, totaling nearly 200,000 active-duty personnel. In 2005 the armed forces had the following personnel: the army, 75,000; the air force, 18,000; air defense, 16,000; the navy, 15,500 (including 3,000 marines); and the SANG had 75,000 active soldiers and 25,000 tribal levies. In addition, there is an Al Mukhabarat Al A ‘amah military intelligence service. Education The approach taken in the Saudi education system has been accused of encouraging Islamic terrorism, leading to reform efforts. To tackle the twin problems of encouraging extremism and the inadequacy of the country's university education for a modern economy, the government is aiming to slowly modernize the education system through the "Tatweer" reform program. The Tatweer program is reported to have a budget of approximately US$2 billion and focuses on moving teaching away from the traditional Saudi methods of memorization and rote learning towards encouraging students to analyze and problem-solve. It also aims to create an education system which will provide a more secular and vocationally based training. 24 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 25. Islamic Heritage Sites Saudi Arabia, and specifically the Hejaz, as the cradle of Islam, has many of the most significant historic Muslim sites including the two holiest sites of Mecca and Medina. One of the King's titles is Custodian of the Two Holy Mosques, the two mosques being Masjid al-Haram in Mecca, which contains Islam's most sacred place, the Kaaba, and Al-Masjid al-Nabawi in Medina which contains Muhammad's tomb. 25 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 26. Economic Analysis of Saudi Arabia Real GDP The GDP Growth Rate shows a percentage change in the seasonally adjusted GDP value in the certain quarter, compared to the previous quarter. Because of climatic conditions and holidays, the intensity of the production varies throughout the year. This makes a direct comparison of two consecutive quarters difficult. In order to adjust for these conditions, many countries calculate the quarterly GDP using so called seasonally adjusted method. The Gross Domestic Product can be determined using three different approaches: the product, the income, and the expenditure technique, which should give the same result. In sum, the product technique sums the outputs of every class of enterprise. The expenditure technique works on the principle that every product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying products and services. The income technique works on the principle that the incomes of the productive factors must be equal to the value of their product, and determines GDP by finding the sum of all producers' income Inflation Rate The data given on this page shows an annual change in the Consumer Price Index. The CPI measures changes in the price level of consumer goods and services purchased by households. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and services and averaging them. The items weight according to their importance. Depending on the country, the highest weights are usually given to the food, energy, housing, clothing, medical care, transportation and household equipment. 26 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 27. GDP Per Capita The GDP per capita given on this page shows the GDP at purchaser's prices in constant 2000 U.S. dollars divided by midyear population. GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Dollar figures for GDP are converted from domestic currencies using 2000 official exchange rates. The term Constant Prices refers to a metric for valuing the price of something over time, without that metric changing due to inflation or deflation. Population. The Population; total in Saudi Arabia was last reported at 28.37 M in 2011, according to a World Bank report published in 2012. Total population is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin. Unemployment Rate The unemployment rate can be defined as the number of people actively looking for a job divided by the labour force. Changes in unemployment depend mostly on inflows made up of non-employed people starting to look for jobs, of employed people who lose their jobs and look for new ones and of people who stop looking for employment. Unemployment Rate in Saudi Arabia increased to 5.80 percent in the first quarter of 2013 from 5.40 percent in the fourth quarter of 2012. Unemployment Rate in Saudi Arabia is 27 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 28. reported by the Central Department of Statistics and Information. From 1999 until 2013, Saudi Arabia Unemployment Rate averaged 5.4 Percent reaching an all time high of 12.40 Percent in December of 2011 and a record low of 4.4 Percent in December of 1999. Age Dependency Ratio The Age dependency ratio in Saudi Arabia was last reported at 49.51 in 2011, according to a World Bank report published in 2012. Age dependency ratio is the ratio of dependents--people younger than 15 or older than 64--to the workingage population--those ages 15-64. Data are shown as the proportion of dependents per 100 working-age population. Exchange Rate The Official exchange rate (LCU per US dollar; period average) in Saudi Arabia was last reported at 3.75 in 2011, according to a World Bank report published in 2012. Official exchange rate refers to the exchange rate determined by national authorities or to the rate determined in the legally sanctioned exchange market. It is calculated as an annual average based on monthly averages (local currency units relative to the U.S. dollar). Stock Market Capitalization The Market capitalization of listed companies (US dollar) in Saudi Arabia was last reported at 3.39E+11 in 2011, according to a World Bank report published in 2012. Market capitalization (also known as market value) is the share price times the number of shares outstanding. Listed domestic companies are the domestically incorporated companies listed on the country's stock exchanges at the end of the year. Listed companies does not include investment companies, mutual funds, or other collective investment vehicles. Data are in current U.S. dollars. Stocks in Saudi 28 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 29. Arabia had a positive performance during the last month. Saudi Arabia Stock Market (TASI), rallied 147 points or 1.83 percent during the last 30 days. From 1994 until 2013, Saudi Arabia Stock Market (TASI) averaged 4919 Index points reaching an all time high of 20635 Index points in February of 2006 and a record low of 1141 Index points in May of 1995. The Tadawul All Share Index (TASI) is a major stock market index which tracks the performance of all companies listed on the Saudi Stock Exchange. The index has a base value of 1000 as of 1985 and it was reorganized on June 30, 2008.. The latest value for Market capitalization of listed companies (current US$) in Saudi Arabia was $373,380,000,000 as of 2012. Government Revenue Saudi Arabia is the world's largest petroleum producer and exporter; oil and gas made up 90 percent of government income and 88 percent of exports in 2010.Saudi Arabia received a "failing" score of 34, ranking 48th of 58 countries. As a highly-centralized monopoly, its revenue management policies are opaque, and it scored poorly on all components of the index. Net Debts Government debt as a percent of GDP, also known as debt-to-GDP ratio, is the amount of national debt a country has in percentage of its Gross Domestic Product. Basically, Government debt is the money owed by the central government to its creditors. There are two types of government debt: net and gross. Gross debt is the accumulation of outstanding government debt which may be in the form of government bonds, credit default swaps, currency swaps, special drawing rights, loans, insurance and pensions. Net debt is the difference between gross debt and the financial assets that government holds. The higher the debt-to-GDP ratio, the less likely the country will pay its debt back, and more likely the country is to default on its debt obligations. 29 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 30. Government Spending Government spending (also called government expenditure or consumption) is the amount of money that federal, state, and local governments spend on public services provided to its citizens. Government expenditure covers spending on goods and services like defence, judicial and education system. Yet, it excludes government transfers like social security and unemployment benefits. Saudi Arabia has the largest budget deficit among the gulf countries. In 1991 the government deficit reached 27% of GDP. In recent years, the Saudi government has made sizable efforts towards reducing its budget deficit by adopting important cuts in government spending. However, despite these efforts the deficit remains substantially high and accounts for about 10% of GDP over the last four years. The success in implementing an effective fiscal policy targeting the control of the budget deficit in Saudi Arabia and, at the mean time, the promotion of the private sector so that it can compete efficiently in the global economy, Agriculture Share Of GDP The Agriculture; value added (% of GDP) in Saudi Arabia was last reported at 2.63 in 2011, according to a World Bank report published in 2012. Agriculture corresponds to ISIC divisions 1-5 and includes forestry, hunting, and fishing, as well as cultivation of crops and livestock production. Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. It is calculated without making deductions for depreciation of fabricated assets or depletion and degradation of natural resources. Industry GDP Share of The Industry Share of GDP in Saudi Arabia was last reported at 63.6% as on February 21, 2013, according to a CIA. 30 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 31. Services Share of GDP Industry The Services Industry Share of GDP in Saudi Arabia was last reported at 36.43% as on February 21, 2013, according to a CIA. IMPORTS Imports in Saudi Arabia increased to 141168 Million SAR in the first quarter of 2013 from 135339 Million SAR in the fourth quarter of 2012. Imports in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1968 until 2013, Saudi Arabia Imports averaged 88941.5 Million SAR reaching an all-time high of 9.56E+10 B USD in December of 2009 and a record low of 2578.0 Million SAR in December of 1968. Saudi Arabia main imports are: machinery, mechanical appliances and electrical equipment (27 percent of total imports), transport equipment and parts thereof (16 percent), base metals (13 percent), chemicals and related products (9 percent) and vegetables (6 percent). Main import partners are: China (13 percent of total imports), United States (12.6 percent), Germany (7 percent) and Japan (6 percent). Others include: South Korea, United Arab Emirates, France and Italy. EXPORTS Exports in Saudi Arabia decreased to 339632 Million SAR in the first quarter of 2013 from 355315 Million SAR in the fourth quarter of 2012. Exports in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1968 until 2013, Saudi Arabia Exports averaged 217628.3 Million SAR reaching an all-time high of 9.32E+10 B USD in December of 2003 and a record low of 9118.0 Million SAR in December of 1968. Saudi Arabia's economy is highly dependent on oil exports (87 percent of total exports) and 31 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 32. the state-owned firm Aramco is the world's largest oil producing and exporting company. Main export partners are: United States (14 percent of total exports), Japan (13 percent), China (12 percent), South Korea (10 percent) and India (8 percent). Others include: United Arab Emirates, Bahrain, Singapore and Twain. Reserve Assets The Total reserves (includes gold; US dollar) in Saudi Arabia was last reported at 556570991484.13 in 2011, according to a World Bank report published in 2012. Total reserves comprise holdings of monetary gold, special drawing rights, reserves of IMF members held by the IMF, and holdings of foreign exchange under the control of monetary authorities. The gold component of these reserves is valued at year-end (December 31) London prices. Data are in current U.S. dollars. Balance Of Trade Saudi Arabia recorded a trade surplus of 198463 million SAR in the first quarter of 2013. balance of trade in Saudi Arabia is reported by the Saudi Arabian monetary agency. from 1968 until 2013, Saudi Arabia balance of trade averaged 128299.9 million SAR reaching an alltime high of 454159.0 million SAR in December of 2005 and a record low of 3898.0 million SAR in December of 1986. Saudi Arabia has been recording trade surpluses since 1968 due to shipments of oil (87 percent of total exports). main imports are: machinery, mechanical appliances and electrical equipment; transport equipment and parts thereof and base metals. main trading partners are: united states (14 percent of total exports and 12.6 percent of imports), china (12 percent of exports and 13 percent of imports) and japan (13 percent of exports and 6 percent of imports). others include: South Korea, United Arab Emirates, India and Germany. 32 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 33. Similarities between Australia & Saudi Arabia Both Are Oceanic Countries And Have Ports For Shipping The first similarities between the two countries are availability of seas which allows them to import and export and give edge. Every country that has availability of this ports enjoy great advantage and KSA and Australia both enjoy this advantage Both Are Dependent In Some Factors As we know that every country in this world is sufficient in one thing and insufficient in other, so both Australia and KSA are dependent in some way or the other. Both needs to rely on other countries which is essential for their survival just like KSA needs to rely on U.S for weapons and Australian needs to rely on U.S and other countries also for weapons, petroleum products etc. Both do Import and Export As a result of above point both do import and export and form commercial relationships. As Australia's second largest market in the Middle East, Saudi Arabia is an important trading partner for Australia. In 2012, Australia's merchandise exports to Saudi Arabia totaled A$1.73 billion, making it our 20th largest market. Saudi Arabia was Australia's biggest market for exports of passenger motor vehicles worth A$774 million in 2012. Other major exports were barley, wheat and meat products excluding beef. Saudi Arabia is also a substantial market for dairy products, vehicle parts and accessories, as well as a growing market for fresh vegetables, refined metals and information communications technology products. Australia-Saudi business ties have expanded. For instance, the then Australia Gulf Council (now merged with the Australian Arab Chamber of Commerce and Industry) conducted a business mission to Saudi Arabia in December 2012 led by former Deputy PM Mark Vaile, former Queensland Premier, Anna Bligh and Australia Post CEO and then Chair of the Council for Australian-Arab Relations, Ahmed Fahour. The March 2013 Joint Ministerial Commission meeting saw the signing of an MOU between the Australia-Saudi Business Council and the Council of Saudi Chambers of Commerce establishing the Saudi Australia Joint Business Council. There are over 3,000 Australian citizens employed in Saudi Arabia, mainly in health, education and other specialist areas. 33 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 34. Saudi Arabia's needs are well suited to Australian capabilities. Saudi Arabia has a sound economy with a fast-growing and young population, a well-managed banking system, good infrastructure, and generally low import duties and barriers. Its business community is sophisticated and familiar with Western practices. Austrade is represented in both Riyadh and Jeddah. Major Importers Both are major exporters. As we know that Australia is also the exporter of crude oil and also save its reserves of crude oil for future use, and also the exporter of other techno goods and service. Whereas, KSA exports large reservoirs of crude oil. Both have Well-built Infra-structure Both the countries have capital formation as well as positive capital formation that is the reason they have both well built there infra-structure which helps them to achieve steady growth. Both Have Political Stability Both the countries have different administration system but they are stable as compare to the world. The above points have proven this point that steady growth with variations is due to stable political conditions. Both have free floating exchange rates Both the countries have free floating exchange rate that is they can change their exchange rates if they adopt different strategies overtime. As we can see Australia has now stable rate of 100 dollars while KSA after years increase its currency because KSA is major crude oil exporter. Both Have Desert Areas In terms of areas both have deserted areas that is the reason they both enjoy hot summers. And this may be the reason they both have crude oil. Bilateral Relationship Australia and Saudi Arabia enjoy a friendly and cooperative relationship, based on extensive trade relations as well as people-to-people contacts. The two countries also cooperate through the G20. 34 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 35. The most recent Australian Federal-level ministerial visit to Saudi Arabia was by then Minister for Foreign Affairs, Senator Bob Carr, in June 2012. A number of other Ministers have also visited Saudi Arabia in recent years. The most recent senior Saudi visitor to Australia was the Minister of Agriculture, HE Dr Fahd bin Abdul Rahman Balghunaim, in March 2013 who co-chaired with then Australian Minister for Trade, Dr Craig Emerson, the 9th Australia-Saudi Joint Ministerial Commission meeting. The Saudi Higher Education Minister HE Dr Khalid Al-Ankary visited in May 2010, signing an MOU on Higher Education Cooperation with Australia. Both Show Improvements Indicators Since 1991 till 2010 and Variations in Both the countries are growing and show variations and improvements in indicators. KSA is a highly developing country and Australia is a high developed country. Major variations include in agriculture share of GDP, industry of KSA, reserves assets, trade balance of KSA, unemployment rate, inflation, and exchange rate of Australia, stock market capitalization, and government revenues of KSA. Growth refers from all the indicators but Australia has attained MOR growth than KSA that is the major reason that it counts in developed countries. 35 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 36. Economic Comparison b/w Australia & Saudi Arabia Real GDP of Australia and Saudi Arabia GDP Annual Growth Rate in Australia is reported by the Australian Bureau of Statistic. From 1991 until 2010, Australia GDP Annual Growth Rate averaged 1004 USD B. Australia's economy is dominated by the service sector (65 percent of total GDP). Yet its economic success is based on abundance of agricultural and mineral resources. The most important and the fastest growing sector of the economy is industry with mining accounting for 13.5 percent of GDP, manufacturing for 11 percent and construction for 9.5 percent. Agriculture accounts for the remaining 2 percent of the GDP. The GDP value of Saudi Arabia represents 0.93 percent of the world economy. GDP in Saudi Arabia is reported by the The World Bank Group. From 1991 until 2010, Saudi Arabia GDP averaged 680 USD Billion. The gross domestic product (GDP) measures of national income and output for a given country's economy. NOTE: Australia form 1991 has more growth tha KSA as seen in the graph and reach very high as compare to KSA, That is the reason Australia economy grow more consistent than KSA. They are using their resources effectively and give opportunity cost correctly. GDP per capita of Australia and Saudi Arabia The GDP per Capita in Australia is equivalent to 301 percent of the world's average. GDP per capita in Australia is reported by the World Bank. From 1991 until 2010, Australia GDP per capita averaged 29651 per capita in USD. The GDP per Capita in Saudi Arabia is equivalent to 113 percent of the world's average. GDP per capita in Saudi Arabia is reported by the World Bank. From 1991 until 2010, Saudi Arabia GDP per capita averaged 11845 USD. The GDP per capita is obtained by dividing the country’s gross domestic product, adjusted by inflation, by the total population 36 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 37. NOTE As seen in the graph both the countries have consistent GDP per capita but Australia has more high GDP than KSA than Australia achieve more high GDP per capita than KSA. Population of Australia and KSA Population in Australia is reported by the World Bank. From 1991 until 2010, Australia Population averaged 16.2 Million. The population of Australia represents 0.33 percent of the world´s total population which arguably means that one person in every 308 people on the planet is a resident of Australia Population in Saudi Arabia is reported by the Central Department Of Statistics & Information. From 1991 until 2012, Saudi Arabia Population averaged 14.1 Million. The population of Saudi Arabia represents 0.41 percent of the world´s total population which arguably means that one person in every 248 people on the planet is a resident of Saudi Arabia NOTE: As seen in graph Australia has less population than KSA because all developed countries focus on less population and nuclear families because the more population increase the more unemployment and per capita income decreases. KSA has high population as compare to Australia according to statistics. KSA needs to slow its population growth because of its limited size. Unemployment Rate of Australia and Saudi Arabia Unemployment Rate in Australia is reported by the Australian Bureau of Statistic. From 1991 until 2010, Australia Unemployment Rate averaged 6.9 Percent. percentage of the labor force 37 Unemployment Rate in Saudi Arabia is reported by the Central Department of Statistics and Information. From 1991 until 2010, Saudi Arabia Unemployment Rate averaged 10.25 Percent. In Saudi Arabia, the unemployment rate measures the number of people actively looking for a job as a | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 38. NOTE As seen in the graph Australia unemployment rate decreases as compare to KSA but KSA has some consistent unemployment rate than some variation comes according to statistics. As discussed above unemployment rate depends upon the population. Age Dependency Ratio of Australia and Saudi Arabia The average Australia age dependency ratio is 49.14. Age dependency ratio of Australia is reported by the Australian Bureau of Statistic from 1991 until 2010 The avergae age dependency ratio of KSA is 67.45. Age dependency ratio of Saudi Arabia is reported by the Central Department of Statistics and Information from 1991 until 2010, NOTE As seen in the graph Australia has constant ratio since 1991 to 2010 but KSA here reduce its age dependency ratio since 1991 to 2010 and reached to Australia’s ratio here. Inflation of Australia and Saudi Arabia The avergae Australia inflation is 2.48 since 1991 till 2010. In Australia, the inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods. The average inflation rate of Saudi Arabia is 2.05 till 2010. In Saudi Arabia, the most important categories in the consumer price index are Foodstuffs and beverages (26 percent of total weight); Renovation, rent, fuel and water (18 percent of total weight) and Transport and telecommunication (16 percent). Others include Home furniture (11 percent); Fabrics, clothing and footwear (8 percent); Education and entertainment (6 percent); Medical care (2 percent) and other expenses and services (13 percent) 38 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 39. NOTE As seen in the graph there is major variations in both countries graph KSA has high inflation rate as compare to Australia in the graph. Whereas, average shows that there is not so much major variations in both countries inflation rate. Exchange Rate of Australia and Saudi Arabia The AUDUSD averaged 1.39267. The AUDUSD spot exchange rate specifies how much one currency, the AUD, is currently worth in terms of the other, the USD. While the AUDUSD spot exchange rate is quoted and exchanged in the same day, the AUDUSD forward rate is quoted today but for delivery and payment on a specific future date. The USDSAR averaged 3.7500. The USDSAR spot exchange rate specifies how much one currency, the USD, is currently worth in terms of the other, the SAR. While the USDSAR spot exchange rate is quoted and exchanged in the same day, the USDSAR forward rate is quoted today but for delivery and payment on a specific future date. NOTE: As seen in the graph KSA has consistent exchange rate as compare to Australia which has some variations. These variations are due to some strategies that Australia adopted since 1991 to 2010. Stock Market Capitalization of Australia and Saudi Arabia From 1991 until 2010, Australia Stock Market (S&P/ASX 200) averaged 3549 Index points. The S&P/ASX 200 is the most important stock market index which tracks the performance of 200 large companies based in Australia. It is a market-capitalization weighted and float-adjusted index. The index has a base value of AUD3133.3, equal to the value of the All Ordinary Shares as of March 31, 2000 39 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 40. From 1994 until 2013, Saudi Arabia Stock Market (TASI) averaged 4930 Index points. The Tadawul All Share Index (TASI) is a major stock market index which tracks the performance of all companies listed on the Saudi Stock Exchange. The index has a base value of 1000 as of 1985 and it was reorganized on June 30, 2008.. NOTE: As seen in the graph Australia has high stock market capitalization as compare to KSA. After 2005 Australia and KSA both countries stock capitalization increases and some huge variations can be seen in the graphs. After this KSA becomes consistent but Australia still on the peak in comparison to KSA. Government Revenues of Australia and Saudi Arabia Australia recorded a Government Budget deficit equal to 3 percent of the country's Gross Domestic Product in 2011/12 fiscal year. Government Budget in Australia is reported by the Australian Government, ADB. From 1991 until 2010, Australia Government Budget averaged -0.9 Percent of GDP. Government Budget in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1991 until 2010, Saudi Arabia Government Budget averaged 13.1 Percent of GDP. Government Budget is an itemized accounting of the payments received by government (taxes and other fees) and the payments made by government (purchases and transfer payments). A budget deficit occurs when an government spends more money than it takes in. The opposite of a budget deficit is a budget surplus NOTE As seen in the graph Australia achieving growth in government revenue despite of deficit budget. KSA on the other hand achieve growth but with some variations. In this section Australia is way to far away than KSA. 40 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 41. Government Spending’s Government Spending in Australia increased to 66363 AUD Million in the second quarter of 2013 from 65844 AUD Million in the first quarter of 2013. Government Spending in Australia is reported by the Australian Bureau of Statistics. Government Spending in Australia averaged 31288.87 AUD Million from 1959 until 2013, reaching an all-time high of 66363 AUD Million in the second quarter of 2013 and a record low of 8290 AUD Million in the second quarter of 1960. While Government Spending in Saudi Arabia increased to 155108 SAR Million in the second quarter of 2013 from 155024 SAR Million in the first quarter of 2013. Government Spending in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 2008 until 2013, Saudi Arabia Government Spending averaged 109519.7 SAR Million reaching an all-time high of 171502.0 SAR Million in August of 2012 and a record low of 76217.0 SAR Million in February of 2008. Net Debts Australia recorded a Government Debt to GDP of 20.70 percent of the country's Gross Domestic Product in 2012. Government Debt To GDP in Australia is reported by the AOFM, Australia. From 1989 until 2012, Australia Government Debt To GDP averaged 19.9 Percent reaching an all-time high of 31.7 Percent in December of 1994 and a record low of 9.7 Percent in December of 2007. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. While Saudi Arabia recorded a Government Debt to GDP of 3.60 percent of the country's Gross Domestic Product in 2012. Government Debt To GDP in Saudi Arabia is reported by the International Monetary Fund. From 1999 until 2012, Saudi Arabia Government Debt To GDP averaged 47.3 Percent reaching an all-time high of 103.5 Percent in December of 1999 and a record low of 3.6 Percent in December of 2012. Generally, Government debt as a percent of GDP is used by investors to measure a country ability to make future payments on its debt, thus affecting the country borrowing costs and government bond yields. 41 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 42. Imports Imports in Australia increased to 27931 Million AUD in August of 2013 from 27680 Million AUD in July of 2013. Imports in Australia is reported by the Australian Bureau of Statistic. From 1971 until 2013, Australia Imports averaged 9045.8 Million AUD reaching an all time high of 27931.0 Million AUD in August of 2013 and a record low of 396.0 Million AUD in May of 1972. While Imports in Saudi Arabia increased to 141168 Million SAR in the first quarter of 2013 from 135339 Million SAR in the fourth quarter of 2012. Imports in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1968 until 2013, Saudi Arabia Imports averaged 88941.5 Million SAR reaching an all time high of 222985.0 Million SAR in December of 2005 and a record low of 2578.0 Million SAR in December of 1968. Saudi Arabia main imports are: machinery, mechanical appliances and electrical equipment (27 percent of total imports), transport equipment and parts thereof (16 percent), base metals (13 percent), chemicals and related products (9 percent) and vegetables (6 percent). Exports Exports in Australia increased to 27309 Million AUD in September of 2013 from 27185 Million AUD in August of 2013. Exports in Australia is reported by the Australian Bureau of Statistic. From 1971 until 2013, Australia Exports averaged 8686.6 Million AUD reaching an all time high of 27963.0 Million AUD in August of 2011 and a record low of 434.0 Million AUD in October of 1971. Rich in natural resources, Australia is a major exporter of commodities. Metals like iron-ore and gold account for 28 percent of total exports, coal for 18 percent and oil and gas for 9 percent. Manufactured goods constitute 33 percent of the total exports with food and metal products and machinery and equipment accounting for the biggest share. Agricultural products, particularly wheat and wool make up 5 percent of trade outflows. While Exports in Saudi Arabia decreased to 339632 Million SAR in the first quarter of 2013 from 355315 Million SAR in the fourth quarter of 2012. Exports in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1968 until 2013, Saudi Arabia Exports averaged 42 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 43. 217628.3 Million SAR reaching an all time high of 677144.0 Million SAR in December of 2005 and a record low of 9118.0 Million SAR in December of 1968. Saudi Arabia's economy is highly dependent on oil exports (87 percent of total exports) and the state-owned firm Aramco is the world's largest oil producing and exporting company. Reserve Assets Foreign Exchange Reserves in Australia increased to 57177 AUD Million in October of 2013 from 52971 AUD Million in September of 2013. Foreign Exchange Reserves in Australia is reported by the Reserve Bank of Australia. Foreign Exchange Reserves in Australia averaged 22819.18 AUD Million from 1969 until 2013, reaching an all time high of 84610 AUD Million in May of 2007 and a record low of 1126 AUD Million in December of 1969. In Australia, Foreign Exchange Reserves are the foreign assets held or controlled by the country central bank. The reserves are made of gold or a specific currency. They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans. While Foreign Exchange Reserves in Saudi Arabia increased to 2623676 SAR Million in August of 2013 from 2581618 SAR Million in July of 2013. Foreign Exchange Reserves in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 2010 until 2013, Saudi Arabia Foreign Exchange Reserves averaged 2043247.9 SAR Million reaching an all time high of 2623676.0 SAR Million in August of 2013 and a record low of 1569145.0 SAR Million in April of 2010. In Saudi Arabia, Foreign Exchange Reserves are the foreign assets held or controlled by the country central bank. The reserves are made of gold or a specific currency. They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans. Trade Balance Australia recorded a trade deficit of 284 Million AUD in September of 2013. Balance of Trade in Australia is reported by the Australian Bureau of Statistic. From 1971 until 2013, Australia Balance of Trade averaged -395.6 Million AUD reaching an all-time high of 2717.0 Million AUD in June of 2010 and a record low of -3429.0 Million AUD in February of 2008. In 2010 and 2011 Australia reported consistent trade surpluses 43 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 44. due to high price of commodities. However in 2012, the trade balance is back in deficit due to sharp in value of exports and rising capital imports. Metals, coal and oil and natural gas account for 54 percent of total exports. Australia is a major importer of machinery and transport equipment, computers and office machines and telecommunication lasers. While Saudi Arabia recorded a trade surplus of 198463 Million SAR in the first quarter of 2013. Balance of Trade in Saudi Arabia is reported by the Saudi Arabian Monetary Agency. From 1968 until 2013, Saudi Arabia Balance of Trade averaged 128299.9 Million SAR reaching an all time high of 454159.0 Million SAR in December of 2005 and a record low of 3898.0 Million SAR in December of 1986. Saudi Arabia has been recording trade surpluses since 1968 due to shipments of oil (87 percent of total exports). Main imports are: machinery, mechanical appliances and electrical equipment; transport equipment and parts thereof and base metals. 44 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 45. Conclusion The reason why Australia be called the first world country is that Australia's economy is consistently among the strongest of advanced economies in the Organization for Economic Cooperation and Development (OECD). As at 2011, it is the world's 13th-largest economy, with a strong commitment to ongoing economic reform and global engagement that emphasizes free trade and investment. With low unemployment, low inflation and low government debt, a highly skilled workforce produced by a world-class education system, and strong links with the fastest growing region in the world, the Asia–Pacific, Australia's economy is set to prosper into the future. Australia's foreign and trade policy is focused on promoting our security and long-term prosperity. It seeks to protect and advance Australia's national interests in a rapidly changing environment, while supporting a stable global order. A commitment to multilateralism, in particular the United Nations, is a central tenet of Australian foreign policy. Australia has been integrally involved in global efforts to build peace and security for decades, just as it has in promoting global trade and investment liberalization. Australia's spectacular natural environment, diversity and high quality of life make it a popular international tourist destination, with nearly six million people visiting Australia in 2011. On the other hand Saudi Arabia’s economic freedom score is 60.6, making its economy the 82nd freest in the 2013 Index. Its score is 1.9 points worse than last year due to substantial declines in business freedom, property rights, trade freedom, and freedom from corruption. Saudi Arabia is ranked 8th out of 15 countries in the Middle East/North Africa region, and its overall score remains above the world average. Driven largely by high oil prices and expansionary public spending, Saudi Arabia’s economy has expanded at an average growth rate of 3.5 percent over the past five years. However, there has been little progress in structural and institutional reform. The kingdom has lost economic freedom two years in a row, recording one of the 15 largest score declines in the 2013 Index. The perceived level of corruption has increased, and the legal system remains susceptible to political influence. Saudi Arabia’s property rights score is now lower than the world average. Despite some progress in previous years, the competitiveness of regulatory efficiency and openmarket policies is also lagging behind other emerging economies. Dynamic gains from free flows of trade and investment continue to be undermined by bureaucracy and a lack of transparency. 45 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 46. There are 2Million people living illegally in KSA which is another reason their per capita income decreases because there is a major rule that the more the denominator increases the more the ratio decreases. In KSA there are restriction in culture, women are not allowed to work, drive and cannot start a business either sole or any other form because of this their most of the growth caters. Australia has also strict fiscal policy and they have large taxations on companies and industries and as we know that in company’s double taxation is charged. Different disciplines of religion affects the growth, for instance KSA cannot import or export liquor or pork but Australia can do and earn foreign exchange. KSA and Australia stock exchange working days affects the market also because KSA’s stock exchange works only in 3 and a half days while Australia’s stock works 6 days in a week. Saudi Arab cannot overvalue its currency due to major export earnings and it can be seen as advantage or disadvantage in the sense of import substitution and export promotion strategy. Saudi Arab has balance growth they focus on competitive advantage but they are also making forward and backward linkages due to which it is closer to the first world countries. 46 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades
  • 47. This page intentionally left blank 47 | ECONOMIC OUTLOOK of Australia & Saudi Arabia: An economic analysis of last two decades