The economy of Saudi Arabia and the trade relations between Germany and Saudi Arabia 29 JUNE 2015 / WIRTSCHAFTSTAG SAUDI -ARABIEN, MUNICH JOACHIM ENENKEL, MEMBER OF THE BOARD OF NUMOV, MEMBER OF THE BOARD OF BILFINGER SE, CO -CHAIRMAN OF THE SAUDI -GERMAN BUSINESS DIALOGUE
Contents I. Introduction: The Kingdom of Saudi Arabia II. Economic Data and Potentials I. The Saudi Economy II. Bilateral Economic Relations Germany-Saudi Arabia III. Planned Projects III. Conclusion 2
I. Introduction: The Kingdom of Saudi Arabia
I. The Kingdom of Saudi Arabia KSA Population almost 30m, about 30% are not citizens Average age 26.4y, about 47% younger than 24y GER 81m 47.2 years Growth rate 1.49% -0.18% Urbanization rate / growth 82.9 / 2.1% 75.1% / 0.16% Literacy 94.7% 99% Years in school 16y (17y for women) 16y 4
II. Economic Data and Potentials
Bn USD GDP growth II. Economic Data KSA GER GDP 752.5bn USD 3.621 trillion USD GDP growth 3.65% 1.4% Mobile phones 1,765 per 1,000 inhabitants Internet users 605 per 1,000 inhabitants 1,210 840 760000 740000 720000 700000 680000 660000 640000 GDP Saudi Arabia 12 10 8 6 4 2 620000 2011 2012 2013 2014 0 GDP real GDP growth 6
USD Percent of GDP II. Economic Data GDP per capita: 24,454 USD (2014) GER 44,700 USD 25500 GDP Saudi Arabia 0,6 Hermes Cat. 2 25000 0,5 Ease of Doing Business (2015): 49 of 189 GER 14 24500 24000 0,4 0,3 23500 0,2 23000 0,1 22500 2011 2012 2013 2014 0 GDP real per capita Saving rate GDP 7
Percent of GDP II. Economic Data State as most important investor (particularly in the social and educational sectors, housing, investment promotion, etc.) High financial capacities and reserves 60,00% 40,00% 20,00% 0,00% -20,00% 2011 2012 2013 2014-40,00% -60,00% -80,00% -100,00% -120,00% Gov. expenditure Gov. debt 8
II. Economic Data Enormous importance of the oil sector for the Saudi economy and the GDP Saudi Arabia has the world s second largest proven oil reserves (⅕ globally) 5% GDP composition 4% 12% Current production about 9.2m bpd, total capacity est. at around 11-12m bpd 6% 7% 52% 14% Oil/Gas Finance/Real estate Retail Other Public sector Industry (non-petrochemical) Construction 9
Bn USD Percent of GDP II. Economic Data Balance of Trade Exports per Sector 180.000 25,00% 160.000 140.000 20,00% Re-exports 2% 120.000 100.000 80.000 60.000 40.000 15,00% 10,00% 5,00% Oil Exports 87% Other 13% Other 3% Petrochemical products 8% 20.000 0 2011 2012 2013 2014 0,00% 10
Saudi Oil Production 1000Barrel/Day Global Oil Price USD/Barrel II. Economic Data Decrease of global oil price affects Saudi Arabia less than other producers High savings Modern facilities with possibility to adjust output (Swing Producer), while being a large producer (almost ⅓ of the total OPEC production) Output was not lowered (OPEC Summit late November 2014), but held stable at 30m bpd May 2015: decoupling of Aramco 10000 9500 9000 8500 8000 7500 Saudi Oil Production and the Global Oil Price 120 100 80 60 40 20 7000 2009 2010 2011 2012 2013 2014 Jan-Feb 2015 0 Saudische Produktion in 1000 Barrel/Tag Globaler Ölpreis pro Barrel 11
II. Economic Data Saudi Stock Exchange Tadawul Currently 169 Listings One of the largest EM exchanges Strong petrochemical listings High potential for consumer goods (Gov. spending) Opening for foreign institutions announced for June 2015 Diversification necessary State actively promoting such a policy Sectors other than the oil and gas related ones are to be developed 12
1000 USD Tons II. Economic Data German imports mainly from the oil/gas sector, petrochemical products and resources (KSA no. 51) 14000000 Trade Germany-Saudi Arabia 3000000 German exports (2013): Other (30.1%), Machines (21.3%), Automotive (14.8%), chemical products (12.0%) (KSA no. 24) Bilateral Investment Treaty (since 1999) Double Tax Agreement (limited, since 2009) AUMA-Fairs: 2 0 12000000 10000000 8000000 6000000 4000000 2000000 2500000 2000000 1500000 1000000 500000 0 2011 2012 2013 2014 Export (1000 USD) Import (1000 USD) Export (tonnes) Import (tonnes) 13
II. Economic Data Projects: Housing projects across the kingdom (2025) (Volume around 38bn USD) King Abdullah Economic City (2025): New city for Industry, offices, retail, education and housing near Mecca (Volume about 100bn USD) King Abdullah City for Atomic and Renewable Energy (2030): far-reaching project aiming to diversify the kingdom s energy production and the clustering of hightech research near Riaydh (Volume about 100bn USD) 14
II. Economic Data Chances Also a large number of resources apart from oil and gas Large domestic market High investments planned (education, infrastructure, health, houding, industry State supported diversification policy Continuous and solid capital spending Open to German Engineering and Technology Investments in Technologies related to Renewable Energies (PV, CS, etc.) Advancement of Efficiency of Industrial and Institutional Facilities in the Kingdom 15
II. Economic Data Challenges Decreasing bureaucracy and lowering visa restrictions Additional investments in renewable energy Saudization and Education & Training (increase of Saudi content in business) Saudi Partner recommended for sustainable business Changes in Leadership 16
III. Conclusion
III. Conclusion Enormous potentials in Saudi Arabia beyond the petro-chemical sector due to the diversification policy NUMOV as partner for a successful engagement in the kingdom Wirtschaftsratgeber Saudi-Arabien Large network in the region, more than 600 member companies active in the Middle East 18
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