Economic history of Saudi Arabia (Essay Sample)

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Saudi Arabia
Saudi Arabia is one of the largest Arab states in Western Asia as well as the second largest in Arab world which is bordered by two cities namely; Jordan and Iraq. It was founded in 1932, however the establishment of the Kingdom started in 1902. This paper will therefore analyze the economic history of Saudi Arabia, its main political economy issues as well as, its current economic situations such as unemployment, inflation, real GDP growth, types of industries in the country, immigration among others.
In 2012, Saudi Arabia reported a rapid economic growth on continuous surplus from private and public sectors. The real Gross Domestic Product increased to about 6.8% that averaged to 7.6 % over the past two years, this was as a result of rising in government as well as, consumer spending. An increase in growth has been experienced in manufacturing, construction, and trade which have been the main driver of the overall growth within the private sector. Presently, Saudi Arabia is said to have been witnessing progress in key reforms, where the government is ensuring that they will continue to invest in the infrastructure of their economy as well as, adopting various measures, which are aimed at strengthening both the small and medium size enterprise sector, hence a substantial increase in employment (Rajhi & Salamah 123).
Saudi Arabia is moderating on their fiscal stance and strong government surpluses by embarking on aggressive countercyclical strategy. The fiscal position is significantly strong, where the government is running a large surplus while reducing the indebtedness to be at low levels as they continue to build up considerable financial assets that will be used in the future. The Saudi public debt to the GDP has on the other hand steadily declined as a result of hydrocarbon sectors which have managed to be boosted as one of the emerging markets within Saudi Arabia. According to the report from Bank Audi, the public debt to GDP declined to 3.6% on the back of a large fiscal surplus of about 15.2% of the GDP over the past years.
For many years, Saudi Arabia has been confronted with what many consider as the greatest challenge of political economy issues and its economic situation. For instance, the Bank of Audi also reported that for the issue of monetary level, the inflationary pressures will slightly ease in the coming years and has eased in the past. In 2012, the consumer price inflation averaged to about 4 %, down from 2011 when it was 4.9%. Conversely, rents increased to 9 % at the same rate, while inflation in food products decreased to 5.2%. Saudi Arabia assures people that inflation will at all times remains manageable in large part to reflect the maintenance of price subsidies on a given range of basic goods which involves foodstuffs and electricity. The country foreign exchange is reserving about US $ 670 billion for the past years and has more than doubled in December 2012. The continued increase in reserves mainly reflects the strong oil prices as well as high crude oil output within the economy of Saudi Arabia
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