Economic Impact of Oil for Saudi Arabia

The economic impact of oil for Saudi Arabia has been immense, and is the primary reason for the nation’s development and high standard of living. Oil is by far the most important sector in the economy, accounting for nearly all of the country’s exports and a sizable part of revenue from taxes. The sector provides a significant portion of government revenues and it is estimated that oil revenues fund around 90% of all government spending. Oil has enabled rapid expansion in the economy and facilitated investment in infrastructure. The development of the industrial sector and the financial sector has been heavily dependent on the availability of oil revenue. This benefits both the private sector, as well as the population in terms of employment and rising incomes. The revenues generated by oil exports has had a major impact on the country’s balance of payments. Oil has been the primary factor in supporting a rapidly growing level of foreign reserves. Oil revenues have helped support the value of the local currency, the riyal, making it easier for the government to fund its public and private sector commitments. Overall, oil has been a major factor in the impressive economic growth achieved by the Kingdom of Saudi Arabia over the past few decades. It has provided the resources for transformative development and improved the quality of life for its citizens.