KSA Economic Overview: GDP to Grow 4.3% in 2011

Global Research
Economy – Saudi Arabia
February 2011

KSA Economic Overview
 Saudi GDP projected to expand by 3.8% in 2010 and 4.3% in 2011.
Saudi Arabia Economy

th
KSA 9 Dev. Plan (2010-14) expects 67.2% spending rise to SAR1.4tn.
 Fiscal surplus of SAR108.5bn expected for 2010.
 TASI increased by 8.2% & Saudi corporate profitability rose by 35.3% in 2010.

Saudi GDP expected to grow by 3.8% in 2010 and 4.3% in 2011
The Kingdom of Saudi Arabia (KSA) after successfully averting the global economic distress (real GDP
growth of 4.2% in 2008 & 0.6% in 2009), is projected to record real GDP growth of 3.8% and nominal
GDP growth of 16.6% (SAR1.6tn) in 2010. Global Research expects the economic expansion of Saudi
Arabia to continue, posting real GDP growth of 4.3% 2011.

Saudi Arabia Economic Snapshot
6% (SAR bn)
1,800 50%
5% 1,600
4.2% 4.3% 40%
3.8% 1,400
4% 30%
1,200
3% 1,000 20%

2.0% 800 10%
2% 600
0%
400
1% 0.6%
200 -10%

0% 0 -20%
2007 2008 2009r 2010p 2011e 2007 2008 2009 Nov-10
Real GDP growth Total reserve assets SAMA net foreign assets growth

Source: Ministry of Economy & Planning, SAMA & Global Research

Diversification high on priority list
The diversification of the economy remains one of the top priorities of the government. The oil revenues
contribute around 80% to the government revenues. The oil sector contribution to nominal GDP has
shown reduction to around 48% in 2009, and the government’s efforts to decrease its dependence on
oil resources are expected to continue, showing desired results in coming years.

Continuing aggressive spending plans
The unwavering commitment and the ability of KSA to facilitate economic growth by providing counter-
cyclical support measures provide reassuring picture for Saudi economic expansion. The Kingdom even
during the times of global slowdown remained committed to accelerating the development process and
enhanced its next five year spending plan (2010-14) by 67.2% reaching SAR1.4tn. Having carried out
actual expenditure of 16.0% higher than the budgeted figure, KSA is still projected to record healthy
fiscal surplus of SAR108.5bn in 2010. Saudi Arabia announced even more expansionary budget,
projecting budget expenditure to increase further by 6.7% in 2011.

Mohammad Ali Shah Tadawul continues to grow
Financial Analyst Tadawul All Share Index (TASI), the largest regional stock market constituting 47% of the total GCC
mashah@globalinv.com.sa market capitalization, posted an annual growth of 8.2% (closing at 6,620.8 points) in 2010. The market
Tel: (966) 1299-4106 capitalization also recorded an increase of 10.9% during the year. Having said that, the overall stock
market activity remained subdued during 2010, recording significant decline in both volume and value of
Global Investment House traded shares. The corporate profitability of Saudi market listed companies showed encouraging results
www.globalinv.net during the year posting an annual increase of 35.3% in 2010.

Global Research – Saudi Arabia KSA Economy

TABLE OF CONTENTS

Economic Indicators………………….……………………………………………………………... 3

Gross Domestic Product………….………………………………………………………………… 4

KSA Ninth Development Plan..…………………………………………………………………….. 8

Public Finance..………………………………………………………………………………………. 10

Saudi Arabian Budget………………………………………………………………………….. 11

Monetary Policy..…………………………………………………………………………………….. 14

Interest Rates……………………………………………………………………………………. 14

Money Supply …………………………………………………………………………………... 15

Inflation ……………………………………………………………………..……………………. 17

Balance of Payment…………………………………………………………………………………. 19

Current Account………………………………………………………………………………… 20

Foreign Trade……………………………………………………………………………………. 21

Population and Labor Force ………………………………………………………………………. 23

Saudi Arabian Stock Market..……………………………………………………………………... 26

Sector Performance……………………………………………………………………………. 28

Initial Public Offerings…………………………………………………………………………. 30

Corporate Profitability ……………………………………………………………………………… 31

February - 2011 2


Economic Indicators

2006 2007 2008 2009r 2010e
Economic Performance
Nominal GDP (SAR bn) 1,335.6 1,442.6 1,786.1 1,408.5 1,630.4
Nominal GDP (USD bn) 356.2 384.7 476.3 375.6 434.8
Nominal GDP Growth (%) 12.9% 8.0% 23.8% -21.1% 16.6%
Real GDP (SAR bn) 786.4 802.2 836.1 841.2 873.2
Real GDP (USD bn) 209.7 213.9 223.0 224.3 232.8
Real GDP Growth (%) 3.2% 2.0% 4.2% 0.6% 3.8%
GDP Per capita (USD) 15,041 15,870 19,198 14,805 16,748
Population (mn) 23.7 24.2 24.8 25.4 26.0
Oil Sector Contribution to GDP (SAR bn) 712.1 779.3 1,071.1 660.6 789.1
Oil Sector /GDP (%) 53.3% 54.0% 60.0% 46.9% 48.4%

Government Finance
Government Revenues (SAR mn) 673,700 642,800 1,101,000 509,800 735,000
Government Expenditures (SAR mn) (393,300) (466,300) (520,100) (596,400) (626,500)
Surplus/(Deficit) (SAR mn) 280,400 176,500 580,900 (86,600) 108,500
Government Revenues /GDP (%) 50.4% 44.6% 61.6% 36.2% 45.1%
Oil Revenues (SAR mn) 604,470.0 562,100.0 983,300.0 434,400.0 766,288.0
Oil Revenues /GDP (%) 45.3% 39.0% 55.1% 30.8% 47.0%
Public Debt (SAR mn) 364,600.0 266,800.0 235,000.0 225,100.0 167,000.0
Public Debt /GDP (%) 27.3% 18.5% 13.2% 16.0% 10.2%
Public Debt /Gov. Revenues (%) 54.1% 41.5% 21.3% 44.2% 22.7%

Money Supply
Money Supply - M1 (SAR mn) 312,742 383,557 425,494 521,558 609,087^
Money Supply - M2 (SAR mn) 538,769 666,616 793,118 844,935 899,487^
3 months SAIBOR (%) 5.0% 4.3% 2.5% 0.8% 0.7%
Inflation Rate (%) 2.2% 4.1% 9.9% 5.1% 5.4%

Foreign Trade
Total Exports (SAR mn) 790,700 874,000 1,175,000 720,700 886,300
Total Imports (SAR mn) (238,800) (309,100) (379,900) (326,200) (328,400)
Trade Balance (SAR mn) 551,900 564,900 795,100 394,500 557,900
Current Account Balance (SAR mn) 370,924 350,016 496,207 85,345 260,900
Current Account /GDP (%) 27.8% 24.3% 27.8% 6.1% 16.0%
Oil Exports to Total Exports (%) 89.3% 88.2% 89.8% 84.9% 86.0%

Other Economic Indicators
Crude Oil Production (mn bpd) 9.2 8.8 9.2 8.2 8.1
Tadawul All Share Index (TASI) (Points) 7,933 11,039 4,803 6,122 6,621
Exchange Rate (SAR: USD) 3.75 3.75 3.75 3.75 3.75
^data as of end Nov 2010
Source: SAMA, Ministry of Economy & Planning, Ministry of Finance, Tadawul, & Global Research

February - 2011 3


Gross Domestic Product
Going through the challenging global economic environment, the Kingdom of Saudi Arabia’s (KSA) ambitious spending plans
and various public initiatives facilitated its economic expansion. The government’s commitment to economic reforms have
shown positive effects with the country’s average GDP growth rate of 3.3% over the last decade (2001–2010). KSA successfully
averted the more recent economic contraction, recording real GDP growth of 4.2% (2008) and 0.6% (2009). The Kingdom is
estimated to record real GDP growth of 3.8% (SAR873.2bn) and nominal GDP growth of 16.6% (SAR1.6tn) in 2010. Global
Research expects the economic expansion in KSA to continue, posting real GDP growth in the range of 4.0% to 4.5% in 2011.

Real GDP vs. GDP Growth

(SAR bn)
1,000 6%

900 5%

800 4%

700 3%

600 2%

500 1%

400 0%
2005 2006 2007 2008 2009r 2010p 2011e
Real GDP GDP Growth


The oil prices averaging around USD77/barrel in 2010 (as compared to around USD61/barrel in 2009) along with higher KSA oil
production during the year (between 8.1mn to 8.2mn b/d) largely benefited the economy. Global Research expects the oil price
recovery to continue with avg. oil prices between USD80-85 /barrel in 2011, which will usher positive results on the Kingdom’s
economic outlook. With exception of 2008, the Saudi GDP per capita ranged between USD14,500 to USD19,500, and is
projected at USD16,748 in 2010.

Gross Domestic Product
2006 2007 2008 2009 2010p
Nominal GDP (SAR bn) 1,335.6 1,442.6 1,786.1 1,408.5 1,630.4
Nominal GDP (USD bn) 356.2 384.7 476.3 375.6 434.8
Nominal GDP Growth (%) 12.9% 8.0% 23.8% -21.1% 16.6%
Real GDP (SAR bn) 786.4 802.2 836.1 841.2 873.2
Real GDP (USD bn) 209.7 213.9 223.0 224.3 232.8
Real GDP Growth (%) 3.2% 2.0% 4.2% 0.6% 3.8%
Per capita GDP (USD) 15,041 15,870 19,198 14,805 16,748
Consumer Price Index (%) 2.2% 4.1% 9.9% 5.1% 5.2%
Population (mn) 23.7 24.2 24.8 25.4 26.0

Besides overall economic expansion, in nominal terms, the private sector after recording growth of 2.9% in 2009 is estimated to
have grown by 5.3% in 2010. In real terms, with government sector growth of 5.9%, the private sector is estimated to grow by
3.7% in 2010. However, similar to last year, the private sector contribution to GDP is expected to stay around 47.8% in 2010.

The oil revenues contribute around 80% to the government revenues and the Kingdom constitutes the largest share of 28% oil
supply to OPEC oil production. The OPEC Reference Basket is estimated to have witnessed oil price increase YoY of around
28% in 2010 that led to positive economic and fiscal results for the country. KSA is projected to post nominal GDP growth of
16.6% in 2010 as compared to decline of 21.1% in 2009.

February - 2011 4


Nominal GDP and Oil Price Contribution to GDP
(SAR bn) (USD/barrel) 100%
2,000 120
90%
1,800
100 80% 40%
1,600 48% 47% 46% 52%
53%
70%
1,400
80 60%
1,200
50%
1,000 60
40%
800
40 30% 60%
600 52% 53% 54%
47% 48%
400 20%
20
200 10%
0 0 0%
2005 2006 2007 2008 2009r 2010e 2005 2006 2007 2008 2009r 2010e
Nominal GDP (LHS) Average Price-Arab Light (RHS) GDP Oil sector GDP Non-oil sector


The diversification of the economy remains one of the top priorities of the government. The sectoral contribution to nominal
GDP shows that the oil sector domination constituting more than 52% since 2005, showed reduction to around 48% in 2009.
The government’s efforts to decrease its dependence on oil resources are expected to show desired results, with non-oil sector
gradually increasing its contribution to the economic output in years to come.

FDI to GDP Trend

(USD bn)
45 10%
40 9%
35 8%
7%
30
6%
25
5%
20
4%
15
3%
10 2%
5 1%
0 0%
2005 2006 2007 2008 2009r 2010e
Inward FDI FDI to GDP

Source: Ministry of Econ. & Planning, UNCTAD & Global Research

Saudi Arabia has been leading the Arab peninsula in attracting FDI and continues to maintain its position of being the economic
power in the Gulf region. Although in absolute terms FDI inflow dropped in 2009, in terms of nominal GDP it increased from
8.0% in 2008 to 9.5% in 2009. The FDI flows are projected to have improved during 2010 and the optimism continues for better
results in 2011.

February - 2011 5


GDP by Economic Activity
The drop in nominal GDP by 21.1% in 2009 is mainly linked to the sharp fall in average OPEC oil prices by 55%, which was
accompanied by lower oil production levels to maintain harmony in prices. Besides other factors the expected nominal GDP
growth of 16.6% in 2010 can be attributed to relatively higher oil prices in 2010 as compared to 2009. The OPEC Reference
Basket witnessing oil price increase of around 26% in 2010 along with higher KSA oil production during the year (between 8.1mn
to 8.2mn b/d), largely benefited the economic performance. Based on Global Research expected average oil prices ranging
between USD80-85 /barrel in 2011, we continue to maintain our positive economic outlook for the Kingdom.

GDP by Economic Activity

Import duties Agric., forestry
0.9% & fishing
2.9%

Social & Producers of
Personal srv. Govt. srv.
1.0% Finance, Insr.,16.0%
Real Estate &
Business srv. Mining &
9.0% Quarrying
43.5%
Transport,
Storage &
Comm.
4.0%
Wholesale,
Retail, &
Hotels
6.1% Manufacturing Electricity, Gas
Construction Industries & Water
5.0% 10.4% 1.0%

Source: Central Department of Statistics & Information, and Ministry of Economy & Planning

Although the mining and quarrying sector recorded an annual decline of 40.1% in 2009, it still continued to dominate the
economic output constituting 43.5% of the total in 2009. The mining and quarrying also includes output from crude petroleum &
natural gas. A closer analysis reveals that crude petroleum & natural gas make up 43.3% of the total GDP. The petroleum & gas
sector exhibited an encouraging 5-year CAGR (2004-09) of 9.8%.

Trend of GDP by Economic Activity
(at current prices in SAR bn) 2005 2006 2007 2008 2009p
Agriculture, forestry & fishing 38.3 39.4 40.2 41.1 41.4
Mining & Quarrying 571.0 668.4 732.7 1,025.2 613.7
Manufacturing Industries 110.7 123.9 136.5 147.9 146.7

Electricity, Gas & Water 11.0 11.7 12.4 13.1 13.7
Construction 54.9 59.1 65.0 68.1 71.1

Wholesale, Retail, Restaurants & Hotels 62.8 67.9 74.0 81.3 85.3

Transport, Storage & Communication 38.4 41.4 45.9 52.8 56.9

Finance, Insurance, Real Estate & Business services 97.8 104.8 111.4 119.1 127.0

Community & Social & Personal services 27.9 29.2 30.6 32.3 33.9
Less: imputed bank service charges 16.7 17.6 18.3 18.8 19.3
Sub-total 996.0 1,128.0 1,230.0 1,562.0 1,170.0
Producers of Gov. Services 176.4 196.4 200.3 209.3 225.9
Import duties 10.1 11.0 11.8 14.9 12.9
Gross Domestic Product 1,182.6 1,335.6 1,442.5 1,786.1 1,409.2

February - 2011 6


The producers of government services held second highest contribution of 16.0% in GDP and recorded one of the highest
annual growth of 7.9% during 2009. The finance, insurance, real estate and business services constitute 9.0% of the GDP and
recorded annual increase of 6.6% in 2009. During the year, financial services largely comprising of banks recorded balance
sheet growth of 5.2% as the bank followed selective expansion approach in the wake of global financial uncertainties. The
construction sector that is largely facilitated by increased public spending on infrastructure projects constituted 5.0% of total
economic activity in 2009 and recorded 5-year CAGR (2004-09) of 6.8%. KSA construction sector being the major player in the
GCC construction industry is currently estimated at around SAR1.5tn and is expected to continue growing with government
support and increased participation from private sector.

The wholesale, retail, restaurants & hotels sector having share of 6.1% in the total output, recorded annual growth of 4.9% in
2009. The retail being one of the popular leisure activities in the Kingdom is expected to continue growing with one of the highest
population growth rate (both regionally & internationally) of more than 2.0%. Additionally with the global muslim population of 1.5
to 2.0bn, the number of pilgrims visiting the holy sites in Saudi Arabia will continue to record increasing trend every year.

GDP by Expenditure

The government and public final consumption expenditures continue to increase in 2009 recording rise of 1.0% & 8.1%,
respectively. As the government consumption expenditure stood at 24.7% of the total expenditure, the private consumption
expenditure held a larger share of 38.1% during 2009. Although the exports of good & services (dominated by crude oil &
petrochemical products) posted annual decrease of 37.4% in 2009, it continues to have a major share of expenditure consisting
53.7% of the total. A significant decrease in average oil prices from around USD95/barrel in 2008 to USD61/barrel in 2009
together with lower oil production levels to maintain the balance with oil prices, are believed to be one of the main reasons that
led to reduced expenditure in this category.

GDP by Expenditure
(at current prices in SAR bn) 2005 2006 2007 2008 2009p

Government Final Consumption Expenditure 262.7 311.1 322.1 345.1 348.5
Private Final Consumption Expenditure 313.0 354.9 421.2 497.0 537.4
Change in stock 20.1 17.0 14.0 47.9 20.7
Gross Fixed Capital Formation 195.6 233.1 295.4 348.0 347.5
Exports of Goods & Services 719.9 844.5 934.3 1,210.7 757.3
Imports of Goods & Services 328.6 425.0 544.4 662.6 602.3
GDP Expenditure 1,182.6 1,335.6 1,442.5 1,786.1 1,409.1

Gross Fixed Capital Formation (GFCF) is used as a measure of the net new investments in fixed capital assets of an economy.
Saudi Arabia has shown encouraging increase in GFCF recording 5-year CAGR (2004-09) of 17.3%. Although in recessionary
times a marked decrease in fixed capital investments could be witnessed, KSA with overall expanding economy maintained
GFCF expenditures at around SAR347.5bn (almost similar levels as compared to the statistics of 2008).

February - 2011 7


KSA Ninth Development Plan (2010-2014)
Saudi Arabia’s Ninth Development Plan (2010-2014) is a second five-year plan in a series of long-term development strategies
aimed at achieving a comprehensive socioeconomic vision by 2024. The Kingdom even during the times of global economic
downturn, remained committed to accelerating the development process and has enhanced its next five year spending plan
(2010-2014) by 67.2% reaching SAR1,444.6bn (USD385.2bn).

Saudi Arabia’s development plans over the last four decades have been very successful in accomplishing developmental
progress in all the major sectors of the economy, leading to an overall strengthening of the Kingdom’s economic structure. The
size of KSA economy recorded an impressive increase by around 72 times (from SAR22.6bn in 1970 to SAR1,630.4bn in 2010).

Economic expansion projected to continue…
Although the Kingdom’s economic expansion slowed down during the last couple of years as the recessionary pressures
hampered global economic growth, it continued to record real GDP growth of 0.6% and 4.2% in 2009 & 2008, respectively.
During the next five years (2010–2014), the Ninth Development Plan aims at realizing average annual real GDP growth of 5.2%,
with economic output expected to increase from SAR855.7bn (USD228.2bn) in 2009 to SAR1,101.2bn (USD293.6bn) in 2014.
The growth in GDP is expected to result in increased GDP per capita income from SAR46,200 in 2009 to around SAR53,200 in
2014. On macroeconomic front, the Kingdom’s Gross Fixed Capital Formation (GFCF) is expected to remain strong recording an
average annual growth rate of 10.4% resulting in a share of 38.5% of GDP in 2014.

Sectoral Share in GDP

70%

60%

50%

40%

30%

20%

10%

0%
Private sector & other Government Services Oil Sector

2004 2009 2014e

Source: Ministry of Economy & Planning, & Global Research

The diversification of the economy remains one of the top priorities of the government, which also facilitates balanced regional
development within the Kingdom. The government’s efforts to decrease its dependence on oil resources, which could eventually
deplete and are also subject to international oil market volatility, seem to have shown encouraging results over the last few
years. During the period of the Eighth Development Plan (2005-2009) the contribution from non-oil sector to GDP increased to
77.1% in 2009 as compared to 73.5% in 2004. The next five year plan envisages further increase in proportion of non-oil sector
contribution to GDP and is expected to reach around 81.3% by 2014. Over the projected five years, the private sector is
expected to post the highest growth of 38.5% till 2014 and will remain dominated by financial, insurance, business & real-estate
services (14.7% of GDP) and manufacturing industries (14.0% of GDP).

The projected financial requirement for the main development sectors in the Ninth Developmental Plan witnessed an increase of
67.2% from SAR863.9bn (USD230.3bn) in Eighth Developmental Plan to SAR1,444.6bn (USD385.2bn) in Ninth Developmental
Plan. Across the board spending increase reflects the government’s unwavering support for sectoral development, with highest
sector contribution of more than 50% continuing to be allocated to Human Resources Development. Human Resource
Development mainly comprising of education development, captured the highest share of spending allocation that amounted to
SAR731.5bn (USD195.1bn) showing an increase of 52.4% over Eighth Plan allocation. The sector includes general education,
higher education, technical & vocational training and science, technology & innovation. The plan encourages the private sector to
establish more schools and increase its share to 15% by 2014. As part of its vision to develop a “knowledge economy” it also
commits to 25 new technological research institutes & facilities. Economic Resources Development witnessed the highest sector
allocation growth of 115.2% under the Ninth Developmental Plan. The allocation target includes achieving growth rate of 6.6%
for investment in agriculture, increasing storage capacity of dams to 2.5bn cubic meters, and capacity of desalination plants to

February - 2011 8


2.07bn cubic meters by 2014. The plan also aims at achieving industry sector growth rate of 7.2%, and allocating mineral
manufacturing sites in Jubail & Yanbu industrial cities and King Abdullah Economic City.

9th Developmental Plan (2010-14) 8th Developmental Plan (2005-09)
Human Resources Human Resources
Development Development

7.0%
7.7% Social & Health 7.6% Social & Health
6.5% Development
Development

15.8% 12.2%
50.6%
Economic Economic
55.6%
Resources 18.0% Resources
19.0% Development Development

Transport & Comm. Transport &
Development Comm.
Development

Municipal & Housing Municipal &
Services Housing Services
Development Development

Source: Ministry of Economy & Planning

The Ninth Development Plan provides an overall framework for development up to 2014, addressing the current domestic and
international challenges. The list broadly includes focus areas of poverty reduction; balanced regional development;
diversification of the economic base; economic stability; domestic and foreign investment; institutional and administrative
reforms; privatization; technology and informatics; and economic, social and cultural impact of globalization. As per the official
sources, one of the most prominent features of the Kingdom's development planning experience is that it is based on the
principles of the market economy, with the private sector playing a significant role in the national economy.

February - 2011 9


Public Finance

Government Revenue

The budget projections show that the government revenues remain dominated by oil proceeds, with oil revenues at an average
constituting 82.0% of the total revenues over the period of last five years. The government projected revenue increase of 14.6%
(from SAR410 in 2009 to SAR470bn in 2010) is expected to turn out to be significantly larger than the budget projections. In
comparison to the earlier year actual revenues, the government revenues are expected to record an increase of 44.2% (from
SAR510bn in 2009 to SAR735bn in 2010). Despite the expected increase in actual expenditure, the higher revenue expectations
are believed to turn the fiscal deficit forecast into surplus for 2010. Although the government actively continues with its efforts to
decrease dependence on oil resources, which could deplete in long run, such diversification initiatives could take time and have
their own set of challenges.

Government Expenditure

Despite slower than expected improvement on global economic front, the Saudi government remained firm on its aggressive
public spending plans. The projected expenditure of SAR580bn for 2011 is a record high spending considering the previous
budgeted figures, and exceeds by 11.5% the actual expenditure recorded in 2008.

Comparing Actual with Budget
Expenditure Revenue
(SAR bn) Budget Actual % change Budget Actual % change
(actual -budget) (actual -budget)
2000 185 235 27.0% 157 258 64.3%
2001 215 255 18.6% 215 228 6.0%
2002 202 233 15.3% 157 213 35.7%
2003 209 257 23.0% 170 293 72.4%
2004 230 285 24.0% 200 392 96.2%
2005 280 347 23.8% 280 564 101.5%
2006 335 393 17.4% 390 674 72.7%
2007 380 466 22.7% 400 643 60.7%
2008 410 520 26.9% 450 1101 144.7%
2009 475 596 25.6% 410 510 24.3%
2010 540 627 16.0% 470 735 56.4%
2011 580 - - 540 - -
Source: Ministry of Finance & SAMA

Although the government projected the budget expenditure increase of 13.7% from SAR475bn in 2009 to SAR540bn in 2010,
the government ended up spending SAR626.5bn an increase of 5.0% as compared to actual expenditure of 2009. The
government’s dedication to prop up the Saudi economy even during the times of global economic slowdown (2007-10), can be
gauged by the actual government expenditure exceeding the budgeted figures by an average of 22.8% over the period of last
four years.

February - 2011 10


Saudi Arabian Budget
Expansionary Budget with 7.4% expenditure increase
The Kingdom Saudi Arabia continues to show its commitment towards enhanced public spending, announcing record high
budgeted government expenditure showing an annual increase of 7.4% to reach SAR580bn in 2011. It is noteworthy that even
during the times of recent global economic distress, the Saudi budget expenditure recorded 3-year CAGR (2008-11) of 12.3% in
order to support the domestic economic growth. Despite the budget expenditure being 16.0% higher than the budgeted figure
during 2010, the Kingdom is expected to record a fiscal surplus of SAR108.5bn for 2010. These results closely matched Global
Research earlier budgetary projections of fiscal surplus of SAR108.7bn for 2010. The government’s efforts to support economic
activity produced encouraging results with estimated real GDP growth of 3.8% in 2010. Based on Global Research forecast of
average oil prices ranging between USD80-85 /barrel in 2011, accompanied by positive economic outlook, we project KSA real
GDP growth of 4.0% to 4.5% and fiscal surplus of around SAR235bn in 2011.

Budget Revenues and Expenditures

(SAR bn)
1,200 35%

30%
1,000
25%
800
20%

600 15%

400 10%

5%
200
0%
0
-5%
2005 2006 2007 2008 2009 2010p 2011e
-200 -10%

Budget Balance Revenues Expenditures Balance as % of GDP

Source: Ministry of Economy & Planning, Ministry of Finance, SAMA, & Global Research

The 2011 budget shows the government’s dedication for continued public spending in order to stimulate investment environment
and incite economic growth. The 2011 budget expenditure of SAR580bn shows an annual increase of 7.4%, while the budget
revenues at SAR540bn are projected to increase by 14.9% over the 2010 budget figures. The increased government
expenditure maintained its focus on the development and investment programs to ensure strong and sustainable economic
growth. As per historical trends, the 2011 budgeted expenditure of SAR580bn could possibly be a conservative estimate
because the actual expenditure was higher by SAR86.5bn in 2010. Considering the government’s conservative budget
projections and Global Research expectations of relatively higher oil prices, the year 2011 could be another year of fiscal
surplus.

Fiscal surplus of 2010 following deficit in 2009
The government visualized a conservative outcome of budget deficit of SAR70bn in 2010, which is expected to successfully
convert into budget surplus of SAR108.5bn in 2010. The details show that the government in 2010 projected 85.1% of its
revenue being generated from oil. Thus, the improved fiscal performance during the year can largely be attributed to the average
oil price (USD77/barrel) increase of 26.2% during the year 2010. Although in comparison to the budgeted figures the government
expenditure is estimated to show an increase of 16.0% reaching SAR626.5bn in 2010, the government revenues are also
expected to show a significant increase of 56.4% to reach SAR735bn during this period.

The appropriation of funds for the major developments and public service sectors recorded an increase of 9.9% reaching
SAR319.2bn (USD85.1bn) in 2010. Overall the sector allocations posted a 5-year CAGR (2006-11) of 15.8%. Analyzing the
details of budget projections, the defence and security has held the highest spending allocation of 31.4% recording an annual
increase of 9.6% (from SAR154.8bn in 2009 to SAR169.7bn in 2010). This category was followed by human resource
development constituting 25.5% of the total, which posted an increase of 12.7% (from SAR121.9bn in 2009 to SAR137.4bn in

February - 2011 11


2010). The government spending on subsidies recording an increase of 16.3% (from SAR17.6bn in 2009 to SAR20.8bn in 2010)
constituted 17.0% of the total expenditure during 2010.

Budget Projections Details
(SAR bn) 2006 2007 2008 2009 2010
Oil Revenues 320.0 330.0 370.0 320.0 400.0
Other Revenues 70.0 70.0 80.0 90.0 70.0
Total Revenues 390.0 400.0 450.0 410.0 470.0

Human Resource Development 87.2 96.5 104.6 121.9 137.4
Transport & Communications 9.8 11.3 12.1 14.6 16.4

Economic Resource Development 12.5 13.9 16.3 21.7 29.3
Health & Social Development 26.8 31.0 34.4 40.4 46.6
Infrastructure Development 4.6 5.2 6.4 7.8 8.4
Municipal Services 11.6 13.6 15.0 16.5 18.7
Defence & Security 110.8 132.9 143.3 154.8 169.7
Public Administration & other
Government Spending 62.8 61.8 63.0 79.1 92.0
Government Lending Institutions 0.6 1.0 0.5 0.5 0.6
Subsidies 8.5 12.8 14.3 17.6 20.8
Total Expenditures 335.0 380.0 410.0 475.0 540.0
Surplus /(Deficit) Expected 55.0 20.0 40.0 (65.0) (70.0)
Source: Ministry of Finance & SAMA

Budget surplus also likely in 2011
We carried out scenario analysis of the government’s fiscal performance during fiscal year 2011 based on three different
situations. Our analysis ranges from the worst to best case, with oil output levels expected to vary from 8.0mn bpd to 8.4mn bpd
and Arab Light Oil prices over the range of USD70 to USD85 per bbl in 2011.

Scenarios for 2011 Budget Outcome
[

(unless stated, all figures in
Worst Case Most Likely Best Case
SAR mn )
Arab Light Price (USD/bbl) 70.0 80.0 85.0
Production (mn bbl/d) 8.0 8.2 8.4
Oil Revenues 731,460.0 861,984.0 940,495.5
Other receipts 51,202.2 68,958.7 94,049.6

Total Revenue 782,662.2 930,942.7 1,034,545.1
Total Expenditure 707,600.0 696,000.0 684,400.0

Surplus/(Deficit) 75,062.2 234,942.7 350,145.1
Source: SAMA, OPEC, & Global Research

Therefore, based on our scenarios analysis, Saudi Arabia could most likely report budget surplus of around SAR235bn
(USD62.6bn) in 2011 that could range between SAR75bn in worst case to SAR350bn under best case scenario assumptions.

Public Debt
The improving fiscal position has further facilitated the government in reducing its public debt. The country’s public debt position
has improved significantly from the highs of 82% of GDP in 2003. The declining trend in public debt recorded 7-year CAGR
(2003-10) of 16.3%, reducing from SAR580.0bn in 2003 to SAR167.0bn in 2010. The government has adequately managed its
liability position over the years, gradually paying off the debt as per its overall monetary plans.

February - 2011 12


KSA Public Debt

(SAR bn)
500 50%
40%
400 30%
20%
300
10%
0%
200
-10%

100 -20%
-30%
0 -40%
2005 2006 2007 2008 2009 2010

Public debt % of GDP % change

Source: Ministry of Finance, CDSI, SAMA, and Ministry of Economy & Planning

The public debt (which is entirely domestic) continued to show improvement during 2010. The public debt recorded a decline of
25.8% (from SAR225.1bn in 2009 to SAR167.0bn in 2010), and also registered improvement in terms of percentage of GDP
from 16.0% in 2009 to 10.2% in 2010.

February - 2011 13


Monetary Policy

Interest Rates
Monetary policy closely related to interest rates and money supply, can be used to influence variety of economic indicators
including inflation, economic growth, and exchange rates. The Saudi Riyal peg with US Dollar (SAR3.75 = USD1.0) since mid
1980s besides providing some economic benefits, also limits the available monetary options. This peg loyalty is not expected to
change in near future.

Repo & Reverse Repo Rates SAIB3M & LIBOR (US) Rates
6% 6%

5% 5%

4% 4%

3% 3%

2% 2%

1% 1%

0% 0%

1Q07
2Q07
3Q07
4Q07
1Q08
2Q08

4Q08
1Q09

3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
3Q08

2Q09
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10

-1%

-2%
Official Repo Rate Reverse Repo Rate
Fed Fund rate LIBOR (US) SAIB3M Gap (SAIB-LIBOR)

Source: SAMA & Bloomberg

In the wake of the global economic distress and monitoring the domestic market conditions, the KSA’s official repo rate at 2.0%
and reverse repo rate at 0.25% have been maintained at these levels since 2Q09. However, Global Research expects the gap
between Saudi’s official repo rate and Fed rate to start narrowing down over the medium term. The LIBOR (US) that largely led
the SAIBOR since 2007, showed the changing position from mid 2009. Besides other market factors, we believe that relatively
significant liquidity injection and softer economic activity in foreign markets eased the interbank rates on a faster pace as
compared to the Saudi market rates.

KSA Government 5-Year CDS Spreads
350

300

250
Spreads bps

200

150

100

50

0
Jun-09

Jun-10
Feb-09

Feb-10
Oct-08

Oct-09

Oct-10
Apr-09

Apr-10
Dec-08

Dec-09

Dec-10
Aug-09

Aug-10

Source: Bloomberg

The Saudi Government 5-Year CDS spreads that peaked to 335bps in Feb09, declined significantly over the rest of the year
2009. Although during 2010 there have been uneven movement in spreads, it continued to oscillate between the range of 70 to
110bps.

February - 2011 14


Money Supply

The increase in currency in circulation by 9.0% coupled with demand deposits growing by 18.4% resulted in overall M1 growth
of around 17.0% till Nov10. The M1 recorded at SAR609.1bn continued to dominate the overall money supply (M3) with its
contribution increasing from 50.7% in 2009 to 57.4% in Nov10. The M2 money supply increase of 6.5% during the year
accounted for growth in time and savings deposits. Overall Saudi Arabia's improved liquidity conditions led to broad money
supply (M3) growth of 3.1% reaching SAR1,061.3bn in Nov10. Although M3 growth of 3.1% was relatively lower than annual
growth of 10.7% recorded last year, the government initiatives of enhanced expenditure had an important influence on
maintaining comfortable liquidity conditions during the year.

Money Supply
(SAR bn) 2005 2006 2007 2008 2009 Nov-10
Currency in Circulation 64.3 69.3 72.2 83.0 88.4 96.4
Demand Deposits 219.3 243.4 311.4 342.5 433.1 512.7
Money Supply (M1) 283.5 312.7 383.6 425.5 521.5 609.1

Time & Savings Deposits 165.3 226.0 283.1 367.6 323.4 290.4
Money Supply (M2) 448.8 538.8 666.6 793.1 844.9 899.5
Other Quasi Monetary Deposits 104.9 121.8 123.1 136.0 184.0 161.8
Money Supply (M3) 553.7 660.6 789.8 929.1 1,028.9 1,061.3
M1 % increase 4.5% 10.3% 22.6% 10.9% 22.6% 16.8%
M2 % increase 10.0% 20.0% 23.7% 19.0% 6.5% 6.5%
M3 % increase 11.6% 19.3% 19.6% 17.6% 10.7% 3.1%
Source: Saudi Arabian Monetary Agency (SAMA)

Net foreign assets grew by more than 6%...
A closer analysis of money supply components reveals that the highest annual growth was recorded by the demand deposits
that grew by 18.4% and also held highest contribution of 48.3% in overall money supply (M3). The time and savings deposits
and other quasi monetary deposits both posted decline of 10.2% and 12.1%, respectively. The decrease in time & savings
deposits can broadly be attributed to financial institutions shedding high cost of funding sources in order to better manage the
softening of asset yields.

Monetary Survey Assets
(SAR bn) 2005 2006 2007 2008 2009 Nov-10
Net Foreign Assets 589.9 899.8 1,171.0 1,683.8 1,631.3 1,735.7

SAMA 563.6 829.2 1,128.5 1,642.3 1,520.0 1,626.5

Commercial Banks 26.4 70.6 42.5 41.5 111.2 109.2

Bank Claims on Private Sector 435.9 476.0 577.9 734.6 734.2 776.3

Bank Claims on Government 127.8 123.3 144.2 209.9 154.2 169.2

Bank Claims on Non-financial Public
Sector Enterprises 31.7 35.0 37.4 32.1 28.1 32.0
Total Monetary Survey Assets 1,185.4 1,534.0 1,930.5 2,660.4 2,547.8 2,713.1

The monetary assets recorded an increase of 6.5% (reaching SAR2,713.1bn till Nov10). Despite going ahead with initiatives for
enhanced public spending, the Saudi Arabian authorities continued to build up on their net foreign assets. The SAMA’s net
foreign assets recorded an increase of 7.0% (from SAR1,520.0bn in 2009 to SAR1,626.5bn till Nov10), while over the medium
term period these assets recorded 4-year CAGR (2005-09) of 28.2%. The SAMA’s net foreign assets also constitute a dominant
portion of 59.9% of total monetary survey assets.

The commercial bank foreign assets witnessed a marginal decline of 1.9%, while the commercial bank deposits with central
bank increased by 5.7% during the first eleven months of 2010. Although the increase in bank risk appetite for lending did not
increase as was widely expected, the rising trend during 2010 is still an encouraging sign. The bank claims on private sector
after remaining stagnant at SAR734bn during 2008 and 2009, recorded an increase of 5.7% reaching SAR776.3bn till Nov10.

February - 2011 15


The bank claims to government sector that declined in 2009, also recorded growth of 9.7% in Nov10 (from SAR154.2bn in 2009
to SAR169.2bn in 2010).

Reserve Assets & SAMA Net Foreign Assets Growth
(SAR bn)
(SAR bn)
1,800 50%
1,800 50%
1,600
1,600 40%
40%
1,400
1,400 30%
30% 1,200
1,200
20% 1,000 20%
1,000
800 800 10%
10%
600 600
0% 0%
400 400
-10% -10%
200 200
0 -20% 0 -20%
2006 2007 2008 2009 Nov-10 2006 2007 2008 2009 Nov-10

Total reserve assets % growth SAMA net foreign assets % growth

The higher average oil prices in 2010 provided a good boost to the Kingdom’s net foreign assets and reserves. During 2009 at
times of relatively lower oil prices, the SAMA’s net foreign assets and total reserve assets both recorded annual decline of 7.4%,
while they recorded year to date growth of around 7.0% till Nov10. The total reserve assets were dominated by investment in
foreign securities that constituted 70.5% of the total and recorded growth of 8.2% till Nov10.

February - 2011 16


Inflation
The Saudi authorities in the recent years have been actively working to control the inflationary pressures and to some extent
have been successful in getting the desired results. Historically, the Saudi inflation has been low ranging between 1.0% to 2.0%
in 2000-05 period. It was during times of strong economic performance and high oil prices that KSA witnessed a surge in annual
inflation rate touching the highs of 9.9% in 2008 and monthly inflation rate of 11.1% in Jul08. The government was able to bring
down the annual inflation rates between 5.0% to 5.5% during 2009 and 2010. We expect the inflation to continue hovering above
5.0% in 2011.

Inflation Rate Inflation Trend in 2010
(General Index)
160 12% 6.5%
140
10% 6.0%
120
8% 5.5%
100
5.0%
80 6%

60 4.5%
4%
40 4.0%
2%
20
3.5%
0 0%

Nov
Feb

Oct
Jul
Jan

Jun
Mar

May
Apr

Dec
Aug
Sep
2005 2006 2007 2008 2009 2010e

Source: Central Department of Statistics and Information & Ministry of Economy and Planning

During 2010, although from the monthly inflation highs of 6.1% in Aug10 the inflation reduced to 5.4% in Dec10, overall annual
inflation for 2010 is expected to be higher than 2009. Despite the estimated government subsidies of around SAR21bn in 2010,
the combination of global and domestic factors is believed to have kept the inflation levels on relatively higher side in 2010. The
annual inflation is expected to reach 5.4% in 2010.

Inflation continues to hover around 5.0%...
Analyzing the eight broad categories of the overall inflation, the renovation, rent, fuel and water category recorded the highest
increase over the last three years (2007-10) averaging at 13.6%. Although the annual increase in this category slowed down
from 17.5% in 2008 to 9.1% in 2010, it continued to post the highest growth rate amongst the constituents.

Inflation Details
2008 (% increase) 2009 (% increase) Nov-10 (% increase)

Foodstuffs & beverages 137.0 14.1% 139.7 2.0% 147.9 5.9%
Fabrics, Clothing & footwear 85.9 0.3% 86.3 0.5% 85.8 -0.6%
Renovation, Rent, fuel & water 128.3 17.5% 146.4 14.2% 159.8 9.1%
Home furniture 103.8 7.6% 112.6 8.4% 115.8 2.9%
Medical care 112.4 5.0% 113.2 0.7% 113.6 0.4%
Transport &
Telecommunication 88.3 0.2% 89.2 1.0% 90.2 1.1%
Education & entertainment 101.0 2.1% 102.3 1.3% 103.2 0.8%
Other expenses & services 133.6 10.6% 139.3 4.3% 149 7.0%
General Index 116.5 9.9% 122.40 5.1% 128.7 5.1%
Source: Central Department of Statistics and Information & Ministry of Economy and Planning

The continuing real supply constraints are believed to be the leading drivers and are under the government’s radar to be better
managed over the coming years. It may not be significant but we expect the annual rental rates to ease off in 2011, thus taking
off some burden from overall inflation rate. However, any pressure arising from higher global commodity prices due to any
unexpected events in 2011, could add pressure to the overall inflation.

February - 2011 17


The foodstuffs and beverages is another major category contributing to overall inflation. KSA with majority of desert area,
imports the bulk of its food requirements. With relatively higher global commodity prices during 2010, the higher food costs led to
foodstuffs and beverages recording an annual increase of 5.9% in 2010 as compared to 2.0% in 2009. The government has
been working on number of options to control the food inflation, which includes cultivating abroad and building food reserves.
Such initiatives are expected to start showing good results in the near future.

February - 2011 18


Balance of Payment
Saudi Arabia’s current account surpluses, largely due to its robust oil exports, maintain their dominance in the balance of
payments account. Despite the transfer of capital for portfolio and other investments, the reserve assets and direct investment
led to the net inflow in capital and financial account during 2009. The dramatic drop in current account surplus in 2009, mainly
due to significant decline in oil prices, is expected to record three folds increase amidst recovery in oil prices.

Balance of Payment
(SAR bn) 2005 2006 2007 2008r 2009p
Current Account 337.5 371.0 350.0 496.2 85.4
Goods & Services 391.2 419.5 389.9 548.1 155.0
Trade Balance 472.6 551.9 564.9 795.1 394.5
Services (81.4) (132.5) (175.0) (247.0) (239.6)
Income 1.6 14.4 24.0 34.4 32.3
Current Transfers (55.4) (62.8) (63.9) (86.3) (101.9)
Capital and Financial Account (net) (207.3) (294.0) (291.4) (383.6) 50.9
Direct investment 46.7 68.7 91.7 134.8 31.3
Portfolio investments 1.3 (44.7) (20.5) (6.1) (75.3)
Other investments (16.7) (52.1) (63.2) 1.5 (27.2)
Reserve Assets (238.6) (265.9) (299.4) (513.8) 122.1
Errors and Omissions (130.2) (77.0) (58.5) (112.6) (136.3)
Source: Ministry of Economy & Planning, Ministry of Finance, & SAMA

Although current account and trade balance surpluses have been consistently maintained over the last decade, the dip of 2009
is expected to experience an impressive recovery with current account & trade balances estimated to reach SAR260.9bn
(increase of 205.6% from 2009) & SAR557.9bn (rise of 41.4% from 2009), respectively in 2010.

Current and Trade Accounts
(SAR bn)
900 50%
800 45%

700 40%
35%
600
30%
500
25%
400
20%
300
15%
200 10%
100 5%
0 0%
2005 2006 2007 2008 2009r 2010p
Current Account Balance (LHS) Trade Balance (LHS)
CA % of GDP (RHS) TB % of GDP (RHS)


Both the current account and trade balance surpluses, in terms of GDP, stood at an average (2000-10) of 16.7% & 32.7%,
respectively. Despite the continued economic expansion, the current account surplus is projected to increase from 6.1% in 2009
to 16.0% in 2010, and trade balance surplus to rise from 28.0% in 2009 to 34.2% in 2010. Global Research expectations of even
higher average oil prices during 2011 gives us confidence for further improved results this year. According to IMF estimates,
although current account balance is projected to continue growing during 2011, it could drop as percentage of GDP.

February - 2011 19


Current Account
The oil exports accounting for 85% to 90% of the total exports have an overpowering impact on the current account balance. The
global economic uncertainties gave rise to lower international oil demand that was reflected in decrease of average price of Arab
Light oil by 37.4% in 2009. The current account surplus was clearly impacted as it recorded a decline of 82.8%, from the highs of
SAR496.2bn in 2008 to SAR85.4bn in 2009. With an increase in average oil prices by around 28% in 2010, overall the current
account surplus is projected to show remarkable improvement of 3 times reaching SAR260.9bn (16.0% of GDP) in 2010.

Current Account Details
(SAR bn) 2005 2006 2007 2008r 2009p
Current Account (a+b+c) 337.5 371.0 350.0 496.2 85.4
a) Goods & Services 391.2 419.5 389.9 548.1 155.0
Trade Balance 472.6 551.9 564.9 795.1 394.5
Exports 676.5 790.7 874.0 1,175.0 720.7
Oil 605.7 703.7 767.8 1,053.9 619.4
Other 70.8 87.0 106.2 121.1 101.3
Imports 203.9 238.8 309.1 379.9 326.2
Services (81.4) (132.5) (175.0) (247.0) (239.6)
b) Income 1.6 14.4 24.0 34.4 32.3
Compensation of employees (1.9) (2.1) (2.2) (2.0) (2.1)
Investment income 3.5 16.5 26.1 36.4 34.4
c) Current Transfers (55.4) (62.8) (63.9) (86.3) (101.9)
General government (2.9) (4.4) (3.7) (6.8) (7.2)
Other sectors (52.4) (58.5) (60.2) (79.5) (94.7)

The deficit in service balance is not expected to change as it mainly reflects the payments for insurance, freight & other services,
and Saudis travel abroad. With dominance of trade balance & its projected increase, the current account surplus is also
expected to rise in 2010.

Oil Prices & Current Account as % of GDP
(USD /barrel)
30.0% 120

25.0% 100

20.0% 80

15.0% 60

10.0% 40

5.0% 20

0.0% 0
2005 2006 2007 2008 2009r 2010p
CA % of GDP Average Price-Arab Light


The current account surplus to GDP that averaged around 27.0%, with Arabian Light oil at SAR72 over the four years period
(2005-08), dropped from 27.8% in 2008 to 6.1% in 2009. The expected higher oil prices in 2010 will lead to improved current
account surplus position that is believed to further strengthen in 2011.

February - 2011 20


Foreign Trade
Exports

The softening of oil prices and consequent reduction in oil production during 2009, led to annual decline in oil exports by 41.2%,
while overall exports decreased by 38.7%. The rising optimism in global economic recovery along with other market factors
drove the oil prices higher in 2010. The Kingdom’s total exports are expected to post an annual increase of 23.0% reaching
SAR886.3bn, while oil exports and non-oil exports are estimated to record a rise of 23.0% and 22.6%, respectively in 2010.

Composition of Exports
(SAR bn) 2005 2006 2007 2008r 2009p
Mineral Products 606.4 706.5 771.1 1,055.3 612.3
Foodstuffs 4.4 5.2 7.4 8.9 10.2
Chemical Products 24.3 26.4 31.2 36.1 29.6
Plastic Products 17.7 19.5 22.8 26.6 23.6
Base Metals and Articles of Base Metals 5.0 6.8 8.9 10.5 7.0
Electrical Machines, Equipment & Tools 2.8 3.9 5.3 6.4 4.8
Other Exports 5.8 8.2 7.7 10.2 9.8
Re-exports 10.8 14.8 20.0 21.5 23.8
Total 677.1 791.3 874.4 1,175.5 721.1
Source: Central Department of Statistics & Information, Ministry of Economy and Planning

The composition of exports indicates dominance of mineral products (mainly oil) constituting an average (2005-09) of 88% of
total exports. The mineral products category posted rising trend with an average (2006-08) growth of 20.8%, till it dropped
sharply in 2009. The other major exports like chemical products, plastic products & re-exports only constitute 4.1%, 3.3%, &
3.3%, respectively, of the total exports in 2009.
Trade Balance
(SAR bn)
1,400

1,200

1,000

800

600

400

200

0
2005 2006 2007 2008 2009r 2010p

Exports Imports Trade Balance


The trade balance (as % of GDP) at an average (2005-08) of 41.2%, after experiencing drop to 28.0% in 2009, is expected to
increase to 34.2% in 2010. Both imports and exports continued to increase over the last decade. However, a faster annual
decline in exports by 38.6% as compared to imports decrease of 16.8% resulted in trade balance decline of 50.4% in 2009. The
trade balance is projected to post an increase of 41.4% in 2010.

February - 2011 21


Imports

The consistent increase in imports over last half decade at an average rate of around 23.0% witnessed a decrease of 17.0% in
2009 and is expected to record marginal increase in 2010. The import base mainly dominated by machinery, appliances,
electrical equipment and parts thereof, recorded annual decrease of 12.1%. The decline in this category could be attributed to
relatively lower domestic consumer and industrial demand, in the wake of overall dampened global economic environment.
However, in terms of its share in total imports the category recorded an increase from 27.2% in 2008 to 28.8% in 2009.

Composition of Imports
(SAR bn) 2005 2006 2007 2008r 2009p
Live Animals & Animal Products 10.6 10.3 12.0 15.4 13.6
Vegetable Products 11.3 12.2 17.8 28.1 21.3

Animal & Vegetable Fats, Oils & their Products 1.4 1.6 2.1 2.7 2.4

Prepared Foodstuffs, Beverages, Spirits, Vinegar & Tobacco 9.7 11.5 13.0 16.1 16.0

Mineral Products 3.5 3.5 4.0 7.1 4.7

Products Of Chemical & Allied Industries 18.2 21.0 25.5 32.7 31.1

Artificial Resins, Plastic Materials, Rubber & Others 8.4 8.9 10.5 13.2 12.3

Raw Hides, Skin types, Travel Goods & articles thereof 0.6 0.7 0.9 1.1 1.0

Wood,Charcol, Cork & their Articles and Wicker Work 1.9 2.0 2.8 3.1 2.7

Paper Materials, Card Board & Articles thereof 4.1 4.3 5.0 6.5 5.3

Textiles and its Articles 9.7 10.3 11.6 13.9 12.7

Footwear, Umbrellas, Artificial Flowers Articles, & Others 1.3 1.4 1.6 1.8 1.8

Articles Of Stone Plaster, Asbestos, Ceramic Products, Glass 3.6 3.8 4.1 5.4 5.6

Pearls, Precious & Semi-Precious Stones /Metals, & Jewellery 3.6 2.2 3.3 5.2 3.2

Base Metals & Articles Of Base Metals 23.8 38.6 50.8 66.0 39.5

Machinery,Appliances,Electrical Equipment & Parts thereof 54.2 67.3 99.7 117.3 103.1

Transport Equipment, Optical, & Other Instruments 46.7 50.5 59.4 77.6 62.3

Surgical Instruments , Watches, Musical Instruments, & Parts
thereof 5.7 6.4 7.9 9.7 9.6

Arms, Ammunition & Parts thereof 1.2 0.8 1.2 2.7 3.3

Misc. Manufactured Articles and Art Collection & Antiques 3.7 4.1 4.9 6.3 6.9
Total 223.0 261.4 338.1 431.8 358.4
Source: Central Department of Statistics & Information, Ministry of Economy and Planning

The other main category of transport equipment, optical and other instruments witnessed a drop in its share from 18.0% in 2008
to 17.4% of total in 2009, and posted annual decrease of 19.8%. The base metal and articles of base metals composing 11.0%
of total imports recorded largest decline of 40.1% in 2009. Having said that, the highest annual increase of 26.1% was posted by
arms, ammunition and parts thereof, which only constituted 0.9% of total imports during 2009.

February - 2011 22

KSA Economic Overview: GDP to Grow 4.3% in 2011

KSA Economic Overview: GDP to Grow 4.3% in 2011

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