REPORT E.pdf

8/18/2019 REPORT E.pdf

http://slidepdf.com/reader/full/report-epdf 1/108

Saudi Economic Report 2014 SECOR)

MAY 2015







Adel M. Fakieh

Minister of Economy and

Planning

In the Name of llah the

Compassionate the Merciful

Praise be to Allah the Almighty, and God's Peace and Blessings

be upon the Prophet and his progeny and his companions.

It gives me pleasure to introduce this edition of the Saudi

Economic Report. The report is compiled by the ministry of

economy and planning, and is intended to provide significant

information on performance of the Saudi economy to readers

with interest in keeping abreast with economic developments.

The report year, 2014, marks the last year of the Ninth

Development Plan (2010-2014). In essence, the Saudi Economic

Report provides an analytical review of developments of the

Saudi economy in 2014. The report highlights developments in

various areas of the domestic economy, such as performance of

the Saudi Economy, prices and cost of living, manpower and

foreign trade, oil market, public finance, and Saudi Arabia's

listing in global indicators. In addition, the report offers a

summary of key developments and forecasts of the global

economy. The report relies mainly on data of the Central

Department of Statistics and Information (CDSI) as well as on

data from other sources in areas not covered by CDSI.

Data reveal that the Saudi economy continues to achieve

remarkable growth rates. Against a backdrop of declining

growth of global economy and collapse of world oil prices,

Preface



For more information on the

contents and data, please contact

the authors of the report :

Dr. Imtithal A. Al Thumairi

(Ph.D in Economics, York University)

Economic Advisor, Ministry of Economy

and Planning

Email: [email protected] Pages: (1-72)

Dana A. Al Deraa (MA degree in Economics, KSU)

Economic Researcher, Ministry of Economy

and Planning

Email: [email protected]

Pages: (73-101)

Tel. No: +966 114011444

Fax. No: +966 114014574

P. O. Box 853 Riyadh 11182

Kingdom of Saudi Arabia

www.mep.gov.sa

Saudi Arabia's real GDP grew by 3.47% in 2014, compared to

2.67% a year earlier.

Another positive note in 2014 has been the increase in domestic

refining capacity, as large scale refineries came into stream,

leading to a fast growth of 12.53% in refining activity, with

ensuing advantages to the economy. On the other hand,

inflationary pressures receded, and employment of Saudinationals in private sector businesses gained momentum.

While the current account dropped due to lower revenues of oil

exports, Saudi Arabia's non-oil exports grew by 8.4%.

Remittances by expatriates living in the kingdom saw a

considerable drop in 2014, compared to their earlier level in

2013.

As the reader will notice, the information and indicatorscontained in this report have been presented in statistical

analysis format, which highlights quantitative dimensions and

real implications, along with key factors behind developments.

This accomplishment was made possible thanks to the

ministry’s expert staff, aided by adequate data bases and

advanced statistical software packages.

I pray to Allah the Almighty to guide us towards achievement of

our goals and to raise the ministry to the expectations of the

Custodian of the Two Holy Mosques, the leader of our

procession, the Crown Prince and the Deputy Crown Prince, may

Allah guide their steps. I also wish to express my appreciation to

H.E the Vice Minister, Mr. Mohamed Saleh Al Daham, and the

work team, for the fruitful efforts they exerted, may Allah the

Almighty grant us sincerity in both words and deeds.

mailto:[email protected]



http://www.mep.gov.sa/






SAUDI ECONOMIC REPORT 2014 , (SECOR)

ContentsTHE MOST IMPORTANT ECONOMIC INDICATORS ...................................................................................... 5

Introduction ..................................................................................................................................................... 6

1. Performance of the Saudi Economy ........................................................................................................... 12

FIRST: Impacts of Changing the Base Year Used For Estimation of GDP from 1999 to 2010: ....................... 13

SECOND: Growth Rates and Contribution of the Private and Oil Sectors to Growth of the GDP................ 16

THIRD: Growth Rates of Activities of the Economy ...................................................................................... 18

FOURTH: Per Capita GDP .............................................................................................................................. 22

FIFTH: Spending on GDP ................................................................................................................................ 23

Shaded Text No. 1: The Kingdom`s Refineries .............................................................................................. 24 2. Prices and Cost of Living ............................................................................................................................. 26

FIRST: Cost of Living Index ............................................................................................................................. 26

SECOND : Wholesale Price Index................................................................................................................... 29

THIRD: GDP Deflator ..................................................................................................................................... 30

FOURTH: Prices of Construction Materials ................................................................................................... 31

FIFTH: Prices and Inflation Rate in Foodstuff and Housing .......................................................................... 32

SIXTH: Comparison of International Foodstuff Prices with Foodstuff Prices in the KSA ............................. 33

SEVENTH: Imports and Inflation Rates of Trade Partners .............................................................................

35 Shaded Text No. 2: Methodology of Calculating Foodstuff Price Indices .................................................... 38

3. Labour force ................................................................................................................................................ 40

FIRST: Saudi Population in the Working Age................................................................................................. 42

A. Saudi Labor Force ....................................................................................................................................... 43

B. Comparison of Saudization Ratios for 2013 and 2014 .............................................................................. 49

C. Saudi Population Out of the Labor Force .................................................................................................. 50

SECOND: Unemployment .............................................................................................................................. 51

4.Foreign Trade .............................................................................................................................................. 54

FIRST: Merchandise Exports of the Kingdom ................................................................................................ 54

SECOND: Imports by Main Components ....................................................................................................... 56

THIRD: Exports and Imports to and From the ten Main Trade Partners of the Kingdom............................ 57

FOURTH: Non-oil Exports of the Kingdom .................................................................................................... 59

FIFTH: Balance of Current Account ............................................................................................................... 60

SIXTH: External Transfers oth the Expatriate Labor Residing in the Kingdom ........................................... 61

5. Oil Market .................................................................................................................................................. 63

FIRST: Oil Prices ............................................................................................................................................. 64

http://c/Users/dderaa/Desktop/%D8%A7%D9%84%D8%AA%D9%82%D8%B1%D9%8A%D8%B1%2011%20%D8%AC%D9%88%D9%86.docx%23_Toc425334882



















































SAUDI ECONOMIC REPORT 2014 , (SECOR) 2

ContentsSECOND: World Oil Production..................................................................................................................... 66

THIRD: World Demand for Oil ....................................................................................................................... 69

FOURTH: Kingdom's Oil Production and Consumption ............................................................................... 71

.6 Public Finance ............................................................................................................................................ 74

FIRST : Public Finance .................................................................................................................................... 74

SECOND: Public Revenues for 2014 .............................................................................................................. 76

THIRD: Public Expenditure for 2014 .............................................................................................................. 77

FOURTH: Public Debt .................................................................................................................................... 81

7. Ranking of the Kingdom international Indices ......................................................................................... 83

FIRST: Global Competitiveness Index ............................................................................................................ 83

SECOND: World Prosperity Index .................................................................................................................. 85

THIRD : Energy Sustainability Index .............................................................................................................. 86

FOURTH: Doing Business Index..................................................................................................................... 87

FIFTH: Future Perspectives of Sovereign ....................................................................................................... 89

SIXTH: Knowledge Economy Index ................................................................................................................ 89

SEVENTH: Global Innovation Index ............................................................................................................... 90

EIGHTH: E-Government Transaction Index ................................................................................................... 92 Shaded text No. 3: Components of Global Competitiveness Index .............................................................. 94

.8 World Economy .......................................................................................................................................... 96

FIRST: Gross Domestic Product ..................................................................................................................... 96

SECOND: Inflation ......................................................................................................................................... 98

THIRD: Unemployment ............................................................................................................................... 100

FOURTH: International Trade ...................................................................................................................... 101





























TablesTable ( :) GDP Growth Rate by Institutional Sectors at 2010 Constant Prices ................ ................. ................ .......... 13

Table ( :2) Gross Domestic Product Growth Rate by Economic Activity at 2010 Constant Prices ............... ............... 18

Table ( :3) Per Capita GDP ................ ................ ................ ................ ................. ................ ................. ................ ............. 22

Table ( :4) Expenditure on Gross Domestic Product at Current Prices ................ ................. ................ ................ ........ 23

Table (5) : Cost of Living Indices by Main Spending Sections ................. ................ ................. ............... ................. ..... 28

Table ( :6) Annual Average of Wholesale Price Index ................ ................ ................. ................ ................. ................ .. 29

Table ( :7) GDP Deflator ................ ................ ................ ................. ................ ................. ................ ................ ................ 30

Table ( :8) Average Prices of Some Construction Materials .............. ................. ................ ................. ................ .......... 31

Table ( :9) Saudi Population Within and Outside Labour Force ................ ................ ................ ................ ................. .. 42

Table ( :1) Saudi Labour Force by Education Status ............... ................. ................ ................ ................. ................ .. 43

Table ( :) Employed Saudis by Economic Sectors ................ ................. ................ ................. ................ ................ ..... 46

Table ( :2) Saudi Population out of Labor Force by Status .............. ................. ................ ................. ................ .......... 50

Table ( :3) Unemployment Among Saudis ............... ................ ................. ................ ................ ................ ................. .. 51

Table ( :4) Merchandise Exports of the Kingdom ............... ................ ................ ................. ................ ................ ........ 55

Table ( :5) Imports of the Kingdom by Main Components ............... ................. ................ ................. ................ .......... 56

Table (6) : Exports of the Kingdom to the ten main trade partners ................. ................ ................. ............... ........... 57

Table ( :7) Imports of the Kingdom from the ten main trade partners .............. ................. ................ ................. ....... 58

Table (8) : Non-Oil Exports of the Kingdom to the ten main trade partners ................ ................. ................ ............. 59

Table ( :9) Current Account ................. ................ ................. ................ ................ ................. ................ ................ ........ 60

Table ( :21) Oil Prices ............... ................ ................ ................ ................. ................ ................. ............... ................. ..... 64

Table ( :2) Average World Oil Production ................ ................ ................. ................ ................ ................ ................. .. 66

Table ( :22) World Oil Demand ............... ................. ................ ................. ................ ................. ................ ................ ..... 69

Table ( :23) Local consumption of Refined Products, Crude Oil and Natural Gas ............... ................ ................ ........ 72

Table ( :24) Public Finance by Sectors ............... ................. ................ ................. ................ ................. ................ .......... 75

Table ( :25) Distribution of Budget Allocations for the Fiscal Year 1435/1436H (2014) by Sectors ............... .......... 78

Table ( :26) Public Debt as a Percent of GDP ................ ................. ................ ................. ................ ................ ................ 81

Table (27) : Kingdom`s Performance according to Global Competitiveness Indices ................ ................ ................. .. 84

Table (28) : Ranking of Countries According to the Prosperity Legatum Index in 2014 ................. ................ ............. 85

Table ( :29) Ranking of Countries According to the Energy Sustainability Index ................ ................ ................. ....... 86

Table ( :31) Kingdom's Ranking in sub-indices of Doing Business Index..................................................................... 87

Table ( :3) Kingdom's Ranking According to Global Innovation Index .............. ................. ................ ................. ....... 91

Table ( :32) Kingdom's Ranking According to E-Government Transactions Index ................. ............... ................. ..... 92

Table ( ( :33 Overall Assessment of EGDI (2014)........................................................................................................... 93

Table (34) : Real growth rates of GDP ................ ................. ................ ................. ................ ................. ................ .......... 96

Table (35) : Inflation Rate (%) ............... ................ ................. ................ ................ ................. ................ ................ ........ 98

Table (36) : Rates of Unemployment (As a Percent of Labor force) ................ ................ ................. ................ ........... 100

Table ( :37) Growth Rates of International Trade (%) ............... ................. ................ ................ ................. ................ 101




FiguresFigure () : Effect of Changing the Base Year on the % Shares of Institutional Sectors & Economic Activities .................... 14

Figure (2) : Effects of Changing the Base Year on Real GDP and its Rate of Growth .............................................................. 15

Figure (3) : Rates of Growth and Contribution of the Private and Oil Sectors to Growth of the GDP .................................. 17

Figure (4) : Contribution of Economic Activities to Growth of GDP........................................................................................ 20

Figure (5) : Iron and Cement Prices (2014) ............................................................................................................................... 31

Figure (6) : Inflation in Foodstuff and Housing ........................................................................................................................ 32

Figure (7) : Comparison of Foodstuff Prices in the Kingdom with International Indices (Annual Change) ........................ 33

Figure (8) : Correlation between international foodstuff prices and foodstuff prices in KSA.............................................. 34

Figure (9) : Inflation Rates of Trade Partners ........................................................................................................................... 36

Figure (1) : Prices of the Kingdom's foodstuff imports ........................................................................................................... 37

Figure () : Economic Participation Rate of Saudis ................................................................................................................. 42

Figure (2) : Saudi Labor Force by Age Group (2014) .............................................................................................................. 43

Figure (3) : Employed and Unemployed Saudis Holders of Secondary, University Degrees and Above (Comparison) .... 44

Figure (4) : Employed non-Saudis by Education Level ............................................................................................................ 45

Figure (5) : Percentage Distribution of New Entrants to the Labor Market ......................................................................... 47

Figure (6) : Percentage Distribution of Employed Saudis and non-Saudis by Professions (2014) ...................................... 48

Figure (7) : Saudization ratios in Economic Sectors ................................................................................................................ 49

Figure (8) : Unemployment Rate Among Saudis..................................................................................................................... 52

Figure (9) : Exports, Imports and Balance of Current Account .............................................................................................. 55

Figure (21) : Exports and Imports to and from the Kingdom and the Ten Main Trade Partners .......................................... 58 Figure (2) : Ratio of Non-Oil Exports to Imports .................................................................................................................... 59

Figure (22) : Transfers of Expatriate Labor and Rate of Annual Change ................................................................................ 61

Figure (23) : Oil Prices ................................................................................................................................................................ 65

Figure (24) : World Oil Production ............................................................................................................................................ 67

Figure (25) : Growth of Oil Production in Selected Countries from OPEC and USA ............................................................... 68

Figure (26) : World Oil Demand ................................................................................................................................................. 70

Figure (27) : Local Consumption of Oil ..................................................................................................................................... 71

Figure (28) : Budget Performance .............................................................................................................................................. 74

Figure (29) : Public Revenues ..................................................................................................................................................... 76 Figure (31) : Public Expenditure ................................................................................................................................................ 77

Figure (3) : Distribution of Budget Allocations of the Year 1435/1436 (2014) by Key Sectors............................................ 80

Figure (32) : Public Debt ............................................................................................................................................................. 81

Figure (33) : Ranking of Countries According to Global Competitiveness indices in 2014/2015 .......................................... 83

Figure (34) : Ranking of Countries According to Doing Business Index (2015) ..................................................................... 88

Figure (35) : Ranking of Countries According to Knowledge Economy Index for 2012 ......................................................... 89

Figure ( :36) GDP Growth Rate in Global Economies (1995-2015).......................................................................................... 97

Figure ( :37) Global Inflation Rates (995-21 5) ...................................................................................................................... 99




THE MOST IMPORTANT ECONOMIC INDICATORS

Real GDP growth rate (%) 2.67 3.47

Oil sector growth rate (%) -1.63 1.49

Non-oil sector growth rate (%) 6.38 5.00

Private sector growth rate (%) 6.95 5.58

Government sector growth rate (%) 5.09 3.68

Total exports (Trillion Riyals) 1,45 1,32

Oil exports (Trillion Riyals) 1,21 1,06

Non-oil exports (Billion Riyals) 172,1 186,6Non-oil exports relative to GDP (%) 6.17 6.67

Total imports (Billion Riyals) 862,1 957,6

Current account balance (Billion Riyals) 507,9 288,4

Surplus relative to GDP (%) 18.20 10.30

Population in Saudi Arabia ( Million People) 29,9 30,7

The number of Saudi entrants to the labor market (Thousand Person) 339,436 237,829

The number of Saudis went out of the labor force (Thousand Person) 98,226 99,498

Saudis unemployment rate (%) 11.7 11.7

Employment in the government sector growth rate (%) 6.40 3.27

Employment in the private sector growth rate (%) 13.50 14.18

Inflation rate (%) 3.5 2.7

Inflation rate in the housing category (%) 3.4 3.4

Inflation rate in the food category (%) 5.7 3.3

Inflation rate in the transport and communication category (%) 2.2 -0.34

Steel prices (Riyal per ton) 3094.4 2903.8

Cement prices (Riyal bag of 50 kg) 14.2 13.91

Average price of Arab Light oil ($\ barrel) 106.53 97.18

Average price of Brent ($\ barrel) 108.62 99.08Average world oil demand (Million barrels \ day) 90.24 91.2

Average world oil supply (Million barrels \ day) 90.07 92.22

Average saudi oil production (Million barrels \ day) 9.59 9.68

Total Revenues (Billion Riyals) 1,156 1,046

Total Expenses (Billion Riyals) 976 1,100

Surplus / deficit (Million Riyals) 180,347 -54,000

Surplus / deficit ratio to GDP (%) 6.46 -1.91

Public debt (Million Riyals) 60,118 44,260

Ratio of public debt to GDP (%) 2.15 1.57

Population and labor force

Prices and cost of living

Oil indicators

Public Finance

2013 2014

The performance of the Saudi economy

Foreign Trade




The Saudi economy achieved a

remarkable growth in 2014, as the

real GDP grew by 3.47%, compared

to 2.67% in 2013.

Increase of oil production in 2014

led to the growth of oil sector, while

non-oil sector slackened.

The slowdown of private sector

growth reflects the sector’s

continued reliance on government

expenditure and the correlation

between the sector’s growth andexpenditure by the government.

Even with that slowdown, the

private sector accounted for the

largest share in the country’s GDP

growth in 2014.

Inflationary pressures saw a

slowdown in 2014, at an inflation

rate of 2.7%, compared to 3.5% in

2013.

The Saudi economy achieved a remarkable growth in 2014, as the real GDP

grew by 3.47%, compared to 2.67% in 2013. The rise in real GDP growth is due

to two major factors, First: The increase in average oil output level by 0.8%. In

this respect, the kingdom's oil production increased from 3,517 billion barrels

in 2013, to about 3,545 billion barrels in 2014, according to data of the ministry

of petroleum and mineral resources. Second: The fast growth of oil refining

activity, which grew by 12.53% in 2014. Activity in this sector achieved

considerable gains as large refineries came into stream, including SATORP in

Jubail and YASREF in Yanbu, leading to increased domestic refining capacity in

the Saudi economy.

However, as oil production increased in 2014, with the resulting rise of oil

sector GDP compared to a year earlier, non-oil sector GDP experienced a

slowdown compared to its growth rate in 2013. The decline in non-oil sector

GDP growth was due to the lower growth of both the government and private

sectors.

The slowdown of private sector growth reflects thesector’s continued reliance

on the government expenditure and the correlation between the sector’s

growth and expenditure by the government. Even with that slowdown, the

private sector accounted for the largest share in the country’s GDP growt h in

2014, with a share of 2.16% compared to 0.64% for the oil sector. The

government sector accounted for the remaining share in GDP growth.

Inflationary pressures in the Kingdom witnessed a slowdown in 2014, at an

inflation rate of 2.7%, compared to 3.5% in 2013. External and domestic factors

can be traced for the decline of inflation in the Kingdom. Among the external

factors, there was the worldwide appreciation of the US Dollar, resulting in the

appreciation of the Saudi Riyal against most major world currencies in 2014,

plus the decline of world food prices.

Introduction




Food prices in the Kingdom show a

rising trend since 2008. Obviously,

prices have not fallen down since

their peak in that year.

Private sector employment grew in

2014 by 14.18%, while government

sector employment grew by 3.28%.

Domestic factors, on the other hand, include stability of inflation rate of rents,

which constitutes the largest sub-component of the housing sector, coupled

with slowdown of inflation of food and beverages, in addition to moderation of

inflation in the transport and communication sector and slowdown of growth in

the non-oil sector. These external and domestic factors led to a decline of overall

inflation rate in the Kingdom in 2014.

Food prices in the Kingdom have shows a rising trend since 2008. Obviously,

prices have not fallen down since their peak in that year despite the decline in

world food prices. Prior to 2008, a strong correlation existed between

worldwide and domestic food prices. However, such correlation fluctuated

after 2008 and eventually ceased to exist. In fact, food prices in the Kingdom

chart a trend of its own and no longer follow the worldwide trend .

Growth of private sector employment accelerated in 2014 by 14.18%,

compared to 13.50% a year earlier. However, government sector employmentgrew by 3.28%, compared to 6.40% in 2013. The increase in private sector

employment can be attributed to policies pursued to reform the Kingdom’s

labor market, which resulted in increased employment of Saudi nationals in the

private sector. A look at employment data in both the government and private

sector in 2013 and 2014 reveals that the number of Saudi nationals employed

by the private sector has increased considerably, from 1.09 million in 2013 to

1.25 million in 2014. The increase was however much lower in the government

sector where the number of Saudi nationals went up from 3.15 million in 2013

to 3.25 million 2014. However, despite the obvious increase of Saudi nationals

employed by the private sector, unemployment remained constant at 11.7 % in

2013 and 2014 respectively.

Introduction (Continued)




The private sector has a limited

capability to solve the

unemployment problem in the

Kingdom. Most jobs offered by the

private sector are for unskilled

labor, while the majority of national

manpower are skilled workers.

Also, the private sector offers

limited job opportunities and a few

work fields for females.

Exports to GDP ratio stood at

47.5%, while imports to GDP ratio

was to the tune of 34%. The current

account posted a sharp decline in

2014.

In 2014, remittances by expatriate

labor in the kingdom grew at much

slower pace than a year earlier, as a

result of restrictions on issuance of

visas, as part of the overall reform

of the labor market.

A study of present conditions of the labor market and data of CDSI manpower

survey shows that the private sector’s current structure is to be blamed for its

limited capability to solve the unemployment problem. This is due to two

reasons. First: The majority of jobs offered by the private sector are unskilled

jobs that do not require high educational level. Thus substitution of expatriate

workers by Saudi manpower would not gain momentum. As a matter of fact, the

majority of national manpower are skilled workers, which explains the fact that

most unemployed persons are university graduates. The second reason is that

the private sector offers limited job opportunities and a few work fields for

females. In 2014, males made up some 88% of new entrants to the labor market

in the private sector, while females accounted for a mere 12%. Also in the same

year, unemployment among females rose by of 32.8%, compared to 5.9% among

males.

Saudi exports reached a total value of some 1,32 trillion Saudi Riyals in 2014,

accounting for 47.5% of GDP. The value of imports stood at SR. 957,6 billion, tothe tune of 34% of GDP. In 2014, the current account posted a decline due to

plummeting oil export revenues. In this respect, the current account surplus

declined to 10.3% of GDP in 2014, compared to 18.2% in 2013. The drop in the

current account surplus is expected to grow even further in the future as a result

of falling oil prices. On theother hand, the volume of the Kingdom’s

merchandise trade fell to SR. 1.9 trillion in 2014, compared to SR. 2.1 trillion in

2013. As a measure of open economy level, foreign merchandise trade accounted

for some 69% of the Kingdom’s GDP in 2014, compared to 73% in 2013.

In 2014, remittances by expatriate labor in the kingdom grew at a much slower

pace than a year earlier. In this regard, remittances rose in 2013 by 19%,

amounting to a total of SR. 127,768 million, compared to a rise of 6% and a total

amount of SR. 135,428 million in 2014. One key factor behind the lower growth

of transfers has been the restrictions on issuance of visas, as part of the overall

reform of the Kingdom’s labor market.





Declining growth of world

economy and a slowdown

of growth of oil demand,

coupled with an oversupplyof oil, caused oil prices to

plummet in 2014.

The kingdom’s 2014 budget

showed a deficit of SR. 54

billion. However, government

expenditure has been

maintained in the country’s

2015 budget estimate, despite

growing signs of declining oilprices.

The world oil market experienced tremendous changes in 2014, prompted by

decline of world economic growth and a lower growth of oil demand, coupled

with an oversupply of oil. According to OPEC data for 2014, worldwide oil

demand grew by 1.06% to 91.2 million barrels per day (MBD), while world

supply grew by 2.39%, amounting to 92.22 MBD. With the global oil balance

posting a surplus of1.02 MBD, oil prices plummeted in 2014. The price of Brent

crude fell by 8.78% to $ 99.08 per barrel compared to $ 108.62 a barrel in 2013.

The average price of Arabian light crude dropped to $ 97.18 a barrel in 2014,

accounting for a decline of 8.78% from its 2013 level of $ 106.53. Support for oil

demand came from non-OECD countries, particularly China, Middle East

countries, Latin American countries and African states. However, growth of oil

supply came from non-OPEC countries, particularly USA, as US shale oil

accounted for most increase in supply.

Preliminary actual data of the Kingdom’s 2014 budget were remarkably

different from initial budget estimate which expected a balanced budget, at

SR.855 billion, in which revenues and expenditure are balanced out. For the

first time however since 2009, the kingdom’s 2014 budget showed a deficit of

SR. 54 billion ($ 14.4 billion). This deficit is equal to 1.9% of GDP. Although

actual revenues exceeded the budgeted revenues by 22.3%, actual expenditure

surpassed budget revenue estimates by a much higher rate of 28.7%. With the

expenditure accounting for 39% of GDP, this led to a budget deficit. However,

government expenditure continued to rise in the country’s 2015 budget

estimate, despite oil market vagaries that led to a decline of oil prices. This is a

testimony to the continued course by the kingdom to strengthen and bolster

development projects that are bound to enhance on-going development.





Saudi Arabia's Global

Competitiveness Report ranking has

retreated. The kingdom, however,

maintained its rank in terms of the

Macroeconomic Environment

Quality pillar. In addition, the

Kingdom held the 2nd rank globally

in public debt-to-GDP-ratio .

World economy witnessed a slight

downturn in 2014, coupled with a

decline of inflation rate and a fall in

unemployment.

In WEF 2014/2015, The Global competitiveness report showed that the

kingdom’s raking has retreated by four ranks, to reach now to the 24th , down

from the 20th position, among the 144 countries covered by the report.

Macroeconomic environment quality pillar remained stable, with the kingdom

holding the 4th rank internationally, due the positive results achieved in some

of the pillar’s indicators. In this regard, the Kingdom held the 2nd position

globally in public debt-to-GDP-ratio, and came 6th in terms of government

budget balance as a share of GDP. However, the Kingdom faces challenges in

order to improve the country’s listings with respect to other indicators. Among

these are participation of women in the workforce, where the kingdom held

141st position, and imports as a percentage of GDP, where the kingdom held

120th position.

World economy experienced a slight downturn in 2014, as it grew by 3.39%,

compared to 3.41% a year before. The slowdown was the result of weak growth

in some oil exporting countries, such as Venezuela, due to the sharp drop in

world oil prices. Growth also declined in some developed countries, such as

Japan. Worldwide, inflation rate dropped in 2014 to 3.5%, compared to 3.9% a

year earlier. Unemployment rates receded in some major world economies,

where in the advanced economy they decreased from 7.9 % in 2013 to 7.3% in

2014.In the Eurozone, unemployment dropped to 11.6 % in 2014, lower than its

earlier level of 11.9% in 2013. world trade volume slackened in 2014, posting a

slight growth of 3.4%, compared to 3.5% a year before. However, global trade

volume is expected to grow by 3.7% in 2015 according to IMF forecasts.




SAUDI ECONOMIC REPORT 2014 , (SECOR)

1

PERFORMANCE OF THE

SAUDIECONOMY




The real GDP of Saudi economy grew

by 3.47% in 2014 compared to 2.67%

in 2013.

Oil refining sector is the fastestgrowing sector in the Saudi economy.

The slower growth in the private

sector reflects the continuation of the

economy`s dependence on

government spending and its growth

is connected to it.

The participation of the private sector

in GDP was 2.16% in 2014 compared

to 2.6% in 2013.

The real GDP of Saudi economy grew markedly during 2014 by 3.47% compared

to 2.67% in 2013. This increase is attributed, mainly, to the increase of average

oil production by 0.8% (from 9.59 million barrel per day (mbpd) in 2013 to 9.68

mbpd in 2014). This means the Kingdom's oil production increased by 27.5

million barrels in 2014 compared to 2013 thereby reaching about 3.55 billion

barrels. Such an increase may also be attributed to the rapid growth of oil

refining activity which increased by 12.53% in 2014 compared to -4.69% in

2013. It is noteworthy that this activity has benefited from entry of large

refineries into production phase such as Saudi Aramco Total Refining and

Petrochemical Company (SATORP) in Jubail Industrial City and Yanbu Aramco

Sinopec Refining Company (YASREF) in Yanbu, which contributed to increase

of the refining production capacity in the Saudi economy.

Comparing the oil sector with the non-oil sector, we find that increase of oil

production in 2014 has contributed to increase of the growth rate of oil sector

by 1.49% compared to -1.63% in the previous year. With respect to non-oil

sector, it grew by 5% in 2014 compared to 6.38% in the previous year. This

decline is attributed to decline of the growth rates of the government and

private sectors, at constant prices, from 6.95% in 2013 to 5.58% in 2014 for the

private sector, and from 5.09% in 2013 to 3.68% in 2014 for the government

sector. Contribution of private non-oil GDP to total GDP in 2014 amounted to

39.5% compared to 38.7% in the previous year. On the other hand, the

contribution of oil GDP to total GDP amounted to 42.7% in 2014 compared to

43.5% in the previous year (table 1).The slowdown of growth in the private sector reflects its continuous

dependence on government spending and linkage of its growth with such

spending. The rate of growth of government capital expenditure decreased

from 19% in 2013 to 12% in 2014. However, despite slowdown of growth in the

private sector, yet it is still the most-contributing sector to GDP in 2014 with a

share of 2.16% to GDP growth compared to 0.64% for oil sector and 0.63% for

the government sector.

1. Performance of the Saudi Economy




CDSI announced the change of

the base year used for estimating

GDP from 1999 to 2010.

The change in the base year

resulted in increase of the oil

sector share, whereas the non-oil

sector share decreased.

FIRST: Impacts of Changing the Base Year Used For

Estimation of GDP from 1999 to 2010: The Central Department of Statistics and Information (CDSI) has changed the

base year used for estimation of the real GDP from 1999 to 2010. This, in turn,

led to change in the shares of various economic activities which compose total

GDP. Changing the base year from 1999 to 2010 is quite suitable since the base

year should represent a more typical year. The year 1999 witnessed the lowest

prices of oil during the 1990s while the year 2010 is considered as more typical.

The national information centers, in charge of data, usually undertake such a

task to give a clear, accurate and more realistic image about growth of real GDP.

Changing the shares of different sectors lead to a clearer understanding of the

change in structure of the Saudi economy and the growth-driving sectors.

These changes in classification of the sectorial shares made the oil sector enjoy

the largest share of total GDP while the shares of most other sectors declined.

Change of the base year led to increase of the oil sector contribution, to real

GDP of 2013, substantially from 20.4% according to the old base year to 43.5%

as per the new base year. On the other hand, contribution of the non-oil privatesector declined markedly from 58.9% according to the old base year to 38.7%

as per the new base year. However, contribution of the government sector

remained at almost similar levels according to the two classifications, 19.8%

and 17% respectively.

Table :() GDP Growth Rate by Institutional Sectors at 2010 Constant Prices

AmountGrowth

rate (%)

Share(%)

AmountGrowth

rate (%)

Share(%)

Oil Sector 1,022,382 -1.63 43.50% 1,037,615 1.49 42.7%

Non-oil sector 1,308,810 6.38 55.69% 1,374,277 5.00 56.5%

Non-oil private sector 908,846 6.95 38.67% 959,585 5.58 39.5%

Non-oil government sector 399,964 5.09 17.02% 414,692 3.68 17.1%

Import duties 19,181 -1.84 0.82% 19,986 4.20 0.8%

Gross Domestic Product 2,350,373 2.67 100.00% 2,431,877 3.47 100.0%

Sectors

20142013

Source: Department of Statistics and Information, National accounts indicators 2014.

)Million Riyals(




Non-oil activities share

retreated by varying degreesand the greatest impact was in

the financial services activity.

The mining quarrying activity

includes producing crude oil

and gas and the mineral

resources.

The drop in oil prices in 1999

resulted in the decline of oil

sector share and the rise of

private sector share according to

the old classification

Moreover, change of the base year caused a remarkable increase in the share of

mining and quarrying activity while shares of other non-oil activities declined.

Contribution of mining and quarrying activity to GDP amounted to 41% for the

base year 2010 compared to 18.8% for the base year 1999. The shares of all

other activities changed at varying degrees with the maximum changes in the

activities of financial services, transport and communications, wholesale and

retail trade, construction, and manufacturing respectively. On the other hand

the least changes took place in banking services activity and government

services activity which were not substantially affected by the change of the

base year (figure 1). The reasons behind change of shares of activities upon

change of the base year can be attributed to the fact that oil prices in 1999 were

very low at an average of USD 17 per barrel, by which the oil sector share

decreased, and of the private sector share of the GDP increased. With the

change of base year to 2010, oil sector share improved due to high prices of oil

(USD 77 per barrel in that year) while the non-oil private sector share declined.

Figure () : Effect of Changing the Base Year on the % Shares of Institutional Sectors & Economic Activities

Source: Prepared by SECOR based on CDSI data, the national accounts indicators in 2014.




Changing the base year caused

adverse impacts on GDPgrowth rate.

Average annual growth rate of

GDP was estimated by 6.2%

during the period (2005-2012)

for the base year 1999, while it

didn’t exceed 4.1% for the base

year 2010.

Change of the base year also affected the growth rate of the GDP. High oil

prices in 2010 increased the weight of oil sector substantially, albeit oil

production remained unchanged to a great extent. Hence, the high weight of

the (stable) oil sector implies lower growth of the GDP .

Comparing the GDP at constant prices, we find that the GDP grew at lower

levels in the base year 2010 compared to growth levels in the base year 1999.

SECOR estimates indicate to an average annual growth rate of 6.2% for the GDP

during the period 2005-2012 using the base year 1999 and not more than 4.1%

using the base year 2010 (figure 2).

Figure (2) : Effects of Changing the Base Year on Real GDP and its Rate of Growth

Source: Prepared by SECOR based on CDSI data, the national accounts indicators in 2014.




Despite decline of non-oil

private sector share, it yet still

constituted the largest sector

contribution share in the Saudi

economy growth in 2014.

The private sector contribution

to in the GDP growth declined,

while the oil sector contribution

increased during 2013 and

2014, however the private

sector contribution is still thelargest.

The oil sector contribution to

the GDP growth constituted the

largest share during the years

2011 and 2012.

SECOND: Growth Rates and Contribution of the Private

and Oil Sectors to Growth of the GDP Based on the aforesaid change of the base year and as a result of giving the oil

sector the largest share of GDP, the large fluctuations which may take place in

oil production will be apparently reflected on growth of the GDP.

Furthermore, notwithstanding decline of the share of non-oil private sector, yet

it is still the most-contributing sector to growth of the Saudi economy in 2014.

The growth track of overall GDP, oil sector GDP and private sector GDP, over

the period 2001-2014, show that the GDP growth trend, which depends on the

percentage share of GDP, follows the growth track of oil sector. Increase or

decrease of the growth rate of oil sector necessarily leads to increase or

decrease of the growth rate of the GDP (figure 3/A). However, the largest

contribution to GDP growth (contribution to increase) during most years–

except for the encircled years – has been through the private sector

contribution to growth by a higher rate than that of the oil sector increase rate

(figure 3/B(.

The percentage contribution of the private sector to GDP in 2014 decreasedcompared to that of 2013, namely 2.16% compared to 2.60% in 2013. On the

other hand, contribution of the oil sector to GDP in 2014 increased compared

to that of 2013. This share amounted to 0.64% in 2014 compared with -0.75%

in 2013.

Contribution of oil sector to GDP growth were the largest in 2011 and 2012 with

shares of 5.5% and 2.3% respectively compared to private sector contribution

of 3% and 2.1% respectively. The high share of oil sector contribution to GDP

during these years is attributed to the increase of oil production in 2011 and

2012 by 14% and 5.15% respectively.




In 2003, the oil sector

contribution was the largest in

GDP as it reached to 9.7% while

the private sector contribution

was 1%.

According to Figure (3/B), the oil sector contribution to GDP in 2003 was veryhigh 9.7% compared to contribution of the private sector which stood at 1%. In

that year, the Kingdom's oil production increased from 2588.98 million barrel

to 3069.74 million barrel, or almost 19% up. With the exception of these years

in which oil production increased substantially, the private sector always

contributed with the largest share to GDP growth.

Figure (3) : Rates of Growth and Contribution of the Private and Oil Sectors to Growth of the GDP

Source: Prepared by SECOR based on CDSI data.






The manufacturing industry

growth jumped from 3.37% in

2013 to 7.83% in 2014.

Manufacturing industry has

characteristics of the leading

production sector of the Saudi

economy.

Increase of domestic demand for oil is attributed to the rapid growth of

manufacturing activity as well as fuel subsidies and population growth. At the

global level, Saudi oil production also increased due to fluctuations of Libyan

oil supplies and attempts by the Kingdom to maintain the share of exports in

the world market. The mining and quarrying activity contributed to 0.3% of

GDP growth in 2014.

Manufacturing activity achieved a high rate of growth which rose from 3.37%

in 2013 to 7.83% in 2014 due to the substantial growth of oil refining activity

which achieved the highest and fastest growth rate, 12.53% in 2014 compared

to -4.69% in the previous year. Hence, oil refining is considered the fastest

growing activity in the Saudi economy in 2014 due to entry of large refineries

into the stage of production and increase of domestic production capacity of

refining. New refineries included SATORP in Jubail. This is a joint venture

between Saudi Aramco and the French Total Company with a production

capacity of 400 thousand barrels per day. They also included YASREF in Yanbu,

which is owned by Saudi Aramco and Chinese Sinopec Company, with

production capacity of more than 400 thousand barrels per day of Arabian

heavy crude. There are also many future projects for expansion in the field ofrefining and increase of the production capacity of refined products and

petrochemicals such as Sadara Petrochemicals Complex with a total cost of

USD 20 billion and comprises 26 manufacturing units. The production capacity

of this Complex is 3 million tons per year of various types of petrochemicals

(Shaded Text No. 1).

Despite decrease of percent share of oil refining within the activities of the

economy, yet its contribution to GDP increased from -0.1% in 2013 to 0.3% in

2014. The manufacturing activity is the most contributing to GDP growth, with

a contribution of 0.9% (figure 4). It is noteworthy that manufacturing activity

accounts for 11.3% of the real GDP and is expected to continue as the main

driver of growth of the Saudi economy. This production sector is considered a

key sector of the Saudi economy. Using the Social Account Matrix (SAM), the

forward and backward linkages of this activity are estimated to be about 1.15

backward linkages with other activities. This means that this activity depends

in its production on inputs from other activities of the economy.




The backward and forwardlinkages of the Manufacturing

industry are estimated by 1.15

and 1.36 respectively.

Electricity, gas and water

activity grew by 5.77% in 2014

as a result of the increasing

growth in the demand for

electricity and water.

Despite the recession in the rate

of growth of construction

activity, yet it is still among the

highest growing activities in the

economy.

Moreover, its forward linkages are estimated to be about 1.36 linkages. Thus,

expansion of this activity may stimulate production by other activities. It is

noteworthy that any activity with backward and forward linkages greater than

one is considered a key sector.

Electricity, gas and water activity achieved a very high growth rate compared

to the previous year, 5.77% in 2014 compared to 1.63% in 2013 due to rapid

growth of demand for electricity and water. For instance, the peak electricity

loads in the Kingdom reached 56,500 MW in the summer of 2014, according to

Power System Control Center, or 7.7% up compared to that of 2013. Total

electricity consumed increased from 256,688 million Kwh in 2013 to 266,293

million Kwh in 2014 according to the MOWE data.

The construction activity maintained its position as one of the most-growing

activities of the economy with a growth rate of 6.47% in 2014. This is mainly

attributed to ongoing government investment spending on the large

infrastructure projects. Despite increase of the GDP value of this activity, yet

the growth rate started to decline compared to that of 2013 which stood at

7.77%. This may be due to the fact that most of the projects have been

completed or their allocations spent during the past year. Contribution of theconstruction sector to GDP decreased from 0.4% in 2013 to 0.3% in 2014.

Figure (4) : Contribution of Economic Activities to Growth of GDP

Source: preparation and accounts by SECOR.Note: Figure crosses for (the contribution of economic activities in growth) and not in the gross domestic product




The reforms of the labor market

caused decline of growth level

in the wholesale and retail

trade, restaurants and hotels

activity.

Transport and communications

activity grew by a high rate of

6.21% in 2014 compared to

6.42% in 2013.

Internet penetration also

witnessed high rates whereas

internet users reached about

18.3 million users in 2014.

Growth rate of finance,

insurance, real estate and

business services activity

declined markedly from 9.22%

in 2013 to 4.11% in 2014

As the case with the construction activity, the growth rate of wholesale and retail

trade, restaurants and hotels activity declined slightly from 6.55% in 2013 to

5.98% in 2014. Most probably, reforms of the labor market and replacement of

high-cost Saudi labor in place of expatriate labor may have caused decline of

growth level in this sector. According to MOL data, the average salary of the Saudi

worker in the wholesale and retail trade activity is about SR 3619 compared to SR

1204 for the non-Saudi, i.e. the cost of the Saudi worker is equivalent to three

non-Saudi workers. Contribution of this activity to GDP also decreased from 0.6%

in 2013 to 0.5% in 2014.

Transport and communications activity grew by a high rate of 6.21% in 2014.

However, this rate is slightly lower than the rate realized in 2013, namely 6.42%.

This activity is likely to benefit from completion of most of the development

projects of roads and communications currently under way. Improvement of

commuting and mobility in the Saudi economy is positively reflected on

performance of this activity in general. The communications activity has

benefited from growth of internet and broadband services. According to a

specialized study about the Gulf market, investments in communication

activities amounted to SR 132 billion in 2014. Internet penetration also witnessedhigh rates whereas internet users reached about 18.3 million users in 2014.

According to Communications and Information Technology Commission data,

spending on communications and information technology services increased to

SR 102 billion by the end of 2014 compared with SR 36 billion in 2005, or at an

average annual growth rate of 14%. Spending on information technology

represents about 36% of total spending, and is concentrated mainly on hardware

and technology services. Spending on communications and information

technology in the Kingdom is expected to increase by 12% in 2015 due to

substantial private and government investments .

Growth rate of finance, insurance, real estate and business services activity

declined markedly from 9.22% in 2013 to 4.11% in 2014. Growth of financial

services activity is usually determined by the level of private sector activity.

Slowdown of growth in this sector may lead to low rates of growth in the activity

of financial services. Contribution of this activity to GDP growth also declined

from 0.8% in 2013 to 0.4% in 2014.




Per capita GDP in the Kingdom

decreased by SR 2114 in 2014

compared to the previous year.

Per capita GDP amounted to

7579 SR monthly by the end of

2014.

FOURTH: Per Capita GDP

Per capita GDP in the Kingdom decreased by 2.27% in 2014 with a value of

SR 90,946 (or USD 24,252) at current prices or SR 2,114 less from its value in the

previous year which amounted to SR 93,060 (or USD 24,816).

By the end of 2014, per capita GDP amounted to SR 7,579 per month compared

to SR 7,755 by the end of the previous year. Decline of per capita income in 2014

is attributed to growth of the value of GDP at a rate lower than the rate of

population growth. GDP grew by about 0.26% from SR 2791,3 billion in 2013 to

SR 2798,4 billion in 2014. On the other hand, population grew by 2.6% from 30

million persons in 2013 to about 30,8 million in 2014 (table 3).

Table :(3) Per Capita GDP

2012 2013 2014Annual

change %

Annual

change %

Amount Amount Amount 2013 2014

GDP at current prices (million Riyals) 2,752,334 2,791,259 2,798,432 1.39% 0.26%

Total population (People) 29,195,895 29,994,272 30,770,375 2.66% 2.59%

Average Per capita GDP at current prices 94,271 93,060 90,946 -1.30% -2.27%

Source: Central Department of Statistics and Information, National accounts indicators 2014. Population Projections 2013.

Items




The low rate in spending on

GDP is attributed to decrease in

the value of exports of goods

and services by 8.54%.

FIFTH: Spending on GDP

Spending on GDP, at current prices of purchasers prices, increased by 0.26%from 2791,3 billion in 2013 to SR 2798,4 billion in 2014. This low rate of

spending on GDP is attributed to decrease in the value of exports of goods and

services by 8.54% from SR 1453,7 billion in 2013 to SR 1329,5 billion in 2014.

Decline in value of exports is mainly attributed to decline of oil exports,

including refined products and natural gas, by 11.64% in 2014 compared to the

previous year, while non-oil exports increased by 6.63% and services exports by

1.28% during the same period. Contribution of exports to spending on GDP

amounted to 47.5% in 2014 compared to 52.1% in 2013. On the other hand, the

rate of growth of imports increased to 11.8% in 2014 compared to 6.83% in2013. The value of merchandise imports increased by 3.38% in 2014 while the

services imports increased by a high rate of 32.07% in the same year.

Consumption expenditure of the government sector grew by 17.60% in 2014

compared to 14.03% in 2013. Final consumption of the private sector also

increased by 8.48% in 2014 compared to 6.79% in 2013. Moreover, spending on

gross capital formation (gross fixed capital formation plus change of inventory)

amounted to SR 777 million in 2014 or 6.16% up from that of the previous year,

(table 4).

Table :(4) Expenditure on Gross Domestic Product at Current Prices

AmountAnnual

growth (%)

Share

(%)Amount

Annual

growth (%)

Share

(%)

Govt. Final Consumption Expenditure 628,522 14.03 22.5% 739,156 17.60 26.4%

Private Final Consumption Expenditure 838,735 6.79 30.0% 909,857 8.48 32.5%

Change of Inventory 70,010 36.4% 2.5% 97,494 39.3% 3.5%

Fixed Capital Formation 662,455 7.73 23.7% 680,080 2.66 24.3%

Exports of Goods and Services 1,453,665 -2.95 52.1% 1,329,530 -8.54 47.5%

Imports of Goods and Services 862,128 6.83 30.9% 957,686 11.08 34.2%

Expenditure on GDP 2,791,259 1.41 100.0% 2,798,432 0.26 100.0%

Source: Central Department of Statistics and Information, National accounts ind icators 2014.

Items

20142013




Shaded Text No. 1: The Kingdom`s RefineriesInvestment in the refining sector is of utmost importance to the Kingdom in its endeavors to realize a diversified

economic growth and to create job opportunities for the new entrants into labor market. Investment in this sector

has started since 1980s. However, the old refineries, such as Jeddah refinery, are less developed than those

established later. Due to growing domestic demand for light products, substantial investments have been

channeled for modernization of the oil-refining sector. The production capacity increased after operation of

SATORP and YASREF refineries in 2014.

Domestic consumption of refined products in the Kingdom has multiplied as a result of government support of

fuel for transport and electricity generation as well as the steady increase of population and economic growth, a

matter which led to increase of electricity consumption and more use of fuel in the field of industry. Fuel price in

the Kingdom is the least worldwide. Diesel price is 6.7 cents per litre and gasoline price is 16 cents per litre.

Refined products are also sold at low prices for the Saudi Electricity Company which consumes about 200,000

barrels of diesel and 40,000 barrels of fuel oil per day for electricity generation.

Capacity (b/d)Shareholder NameOperationalRefinery

Domestic refineries

90,000Saudi Aramco976 Jeddah

550,000Saudi Aramco986Ras Tanura

124,000Saudi Aramco98Riyadh

241,111Saudi Aramco979 Yanbu400,000Saudi Aramco21 6 Jazan

Domestic refining ventures

411,111Saudi Aramco; Exxon983 Yanbu (Samref (

315,111Saudi Aramco; Shell986 Jubail (Sasref (

425,111Saudi Aramco; Sumitomo

Chemical

991Rabigh

Saudi AramcoLuberef

400,000Saudi Aramco; Total21 4 Jubail (Satorp)

400,000Saudi Aramco; Sinopec21 4 Yanbu (Yasref)

International refining ventures

241,11125%Saudi Aramco– Fujian Co _

Fujian Refining and

Petrochemical Co

395,1115%Saudi Aramco– Showa shell

Co _

Showa Shell, Japan

669,000%35 Saudi Aramco– S-Oil Co _S-Oil, Republic of Korea

1070,00051%Saudi Aramco– Sell Co _

Motiva Enterprises LLC,

United States




2

PRICES AND

COST OF

LIVING




The inflationary pressures in the

Kingdom decelerated recording

an inflation rate of 2.7% in 2014

compared with 3.5% in 2013.

The main factors influencing the

overall inflation rate in the Saudi

economy are the food section

and housing, water, electricity,

gas and other types of fuel as

they comprise 43% the overall

index.

The inflation rate of rents

remained stable at 3.9% , which

influenced the stability of

inflation rate of housing section,

which is irresponsible for the

low inflation rate in 2014.

The inflationary pressures in the Kingdom decelerated recording an inflation

rate of 2.7% in 2014 compared with 3.5% in 2013. It is noteworthy that external

and internal factors have contributed in the slowdown of inflation in the

Kingdom. At the global level, the value of the dollar increased, meaning that

the value of Saudi Riyal went up against most currencies in the world during

2014 in addition to the decrease of world food prices and the weak growth of

the world economy. At the domestic level, the overall inflation rate declined

due to the stability of inflation rate of rents (which is the main branch

component of housing), slowdown of inflation rate of food and drinks, decrease

of the inflation rate in transport and communications sectors and the moderate

growth rate of non-oil economy.

FIRST: Cost of Living Index

The main factors influencing the overall inflation rate in the Kingdom

comprise the following main spending sections: food section whichrepresents 22% of the overall index; housing, water, electricity, gas

and other types of fuel section which constitutes 20.5%; transport and

communications section which constitutes 18.5% of the overall index;

house equipment and maintenance works which constitutes 9.1% and

clothing and footwear section which represents 8.4%. The other six

sections constitute 21.5% of the overall index.

Concentrating on the first three sections which represent 61% of the

overall index, the inflation rate of rents remained stable at 3.9% in

2014, a matter which affected the stability of the inflation rate of the

housing section. Therefore, this section could not be considered as

responsible for the drop of the inflation rate.

2. Prices and Cost of Living




The recreation and culture section

recorded the highest inflation rate

increasing from 1.7% in 2013 to

7.2% in 2014.

The housing, water, electricity and

fuel section ranked first in terms of

contribution to overall inflation in

2014, followed by food and drinks

section.

The two sections responsible for the decline of the inflation rate are the food

and drinks section where the inflation rate decelerated from 5.7% in 2013 to

3.3% and the transport and communication section where the inflation rate

declined from 2.2% in 2013 to a negative growth rate of 0.34%.

Moreover, the inflation rate decelerated in the clothing and footwaer section

from 1.5% to 0.7%, but the impact of this section on the general index in 2014

did not exceed 2.2%.

Despite the increase of the prices of the group of hotels and furnished

apartments services from 129 to 134 and an inflation rate from 0.2% in 2013 to

3.7 in 2014, the inflation rate in the hotels and restaurants sector decelerated

from 4.2% to 2.2% while the recreation and culture section recorded the

highest inflation rate increasing from 1.7% in 2013 to 7.2% in 2014. This section

represents a share of about 3.5% of the overall index.

The recreation and culture section comprises: audio-visual devices,

photography, recreational and cultural goods and services, books, newspapers,

stationery and offers of holidays and tourism. The section has been influenced

by the increase in its all groups, particularly in the offers of holidays andtourism which increased by 11.2% and the group of other goods related with

recreation and tourism which increased by 18.4%, (table 5).

The overall inflation rates are influenced by the changes in sections comprising

the overall cost of living index by different ratios. The housing, water,

electricity and fuel section ranked first in terms of contribution to overall

inflation for 2014, where it achieved 0.9%, which is the same rate of 2013. The

contribution rate of food and drinks to the overall inflation rate declined from

1.3% in 2013 to 0.8% in 2014. The contribution rate of house equipment and

maintenance works in 2014 remained at the same level of the previous year

(about 0.4%). The contribution rate of transport and communication sections

in the overall inflation rate declined from 0.2% and 0.1% in 2014 to 0.0% for

each.




The recreation and culture

section ranked fourth in 2014 in

terms of influence ratio on

o v e r a l l i n f l a t i o n i n d e x.

The recreation and culture section ranked fourth in 2014 in terms of influence

ratio on overall inflation index whereas the rate of contribution to inflation

increased from 0.1% in 2013 to 0.2% in 2014.

Table (5) : Cost of Living Indices by Main Spending Sections

2012 2013 2014

Amount Amount Amount 2013 2014 2013 2014

General Index 100 122.4 126.7 130.1 3.5% 2.7%

Food and beverages 21.7 132.9 140.5 145.1 5.7% 3.3% 1.3 0.8

Tobacco 0.5 141.3 153.1 162.3 8.4% 6.0% 0.0 0.0

Clothing and Footwear 8.4 103.3 104.8 105.5 1.5% 0.7% 0.1 0.0

Housing , Water, Electricity, Gas & other fuels 20.5 148.7 153.8 159.1 3.4% 3.4% 0.9 0.9

Furnishings, household equipment & maintenance 9.1 117.5 122.6 128.2 4.3% 4.6% 0.4 0.4

Health 2.6 105.6 109 112.6 3.2% 3.3% 0.1 0.1

Transport 10.4 108.3 111 110.4 2.5% -0.5% 0.2 0.0

Communication 8.1 92.1 93.8 93.7 1.8% -0.1% 0.1 0.0

Recreat ion and Culture 3.5 104.5 106.3 114 1.7% 7.2% 0.1 0.2

Education 2.7 110.2 112.6 115.9 2.2% 2.9% 0.1 0.1

Restaurants and Hotels 5.7 121.7 126.8 129.6 4.2% 2.2% 0.2 0.1

Miscellaneous goods and services 6.8 117.8 117.6 120.1 -0.2% 2.1% 0.0 0.1

(2007=100)

Inflation rate

Inflation

Contribution rate

(%)

Source: SECOR calculation based on the Central Department of Statistics and Information data, Cost of living Bulletin 2014.

Relative

importance(%)

Items




The growth in Wholesale Price

Index declined form 1.2% in 2013

to 0.6% in 2014.

Foodstuff prices recorded a rate of

0.8% in 2014, compared to 3.8%

in 2013.

Chemical materials prices rose by

3.9%, especially the prices of

ethylene and polyethylene

dichloride, and Pauline

polyethylene.

SECOND : Wholesale Price Index

This index measures the average change in the prices of goods and services soldin the domestic wholesale market. This index comprises a sample of 160 items

distributed over ten main sections. Growth in this index decelerated and

recorded an increase of 0.6% in 2014 compared with the change ratio of 1.2%

in 2013. This is attributed to the slowdown of increase in some main groups of

this index. Prices of foodstuff and live animals section increased by 0.8%

compared with an increase ratio of 3.8% in the previous year. This section

represents 31.9% of the average wholesale price index. The prices of goat meat,

fresh fish and rice increased by 8.7%, 11%, and 4.9% respectively but thepercentage share of these items are very low in the average price index

representing 0.79%, 0.89% and 0.49% respectively.

Prices of live cows, poultry, egg, vegetables and fruits decreased, particularly

prices of tomato which declined by 10.3%. On the other hand, prices of orange,

dates, coffee and fodder have decreased. Prices of oils, animal and plant fats

also declined by 1.2% while prices of chemical materials section and related

materials decreased by 3.9%. The share of this section represents 9.8% of the

overall index. The highest increase ratio was in the prices of the chemical

materials section, ethylene, ethylene dichloride and polyethylene. The highest

decline ratio was in other goods section, particularly gold, by 8.4%.

Table :(6) Annual Average of Wholesale Price Index

2012 2013 2014

Amount Amount Amount

General Index 100 156.4 158.2 159.1 1.2% 0.6%

Food & Live Animals 31.9 178.6 185.3 186.7 3.8% 0.8%

Beverages & Tobacco 1.2 151.6 170.9 177.2 12.7% 3.7%

Raw Materials 0.3 217.4 204.1 204 -6.1% 0.0%

Mineral & Fuels 10.1 184.8 186.3 186.3 0.8% 0.0%

Oils & Fats 0.4 149.3 150.7 148.9 0.9% -1.2%

Chemicals 9.8 217.7 203.8 211.8 -6.4% 3.9%

Manufactured Goods 26.2 144.1 143.9 143.4 -0.1% -0.3%

Machinery & Transports 13.4 136.2 143.3 143.4 5.2% 0.1%

Misc. Manufactured 6.4 151.8 135.8 137 -10.5% 0.9%

Other Commodities 0.3 310.9 275.7 253.2 -11.3% -8.2%

Source: SECOR calculation based on the Central Department of Statistics and Information data, wholesale Price Index Bulletin 2014.

Relative

importance

(%)

Annual

change(%)

(2013-2014)

Annual

change(%)

(2012-2013)

items




GDP deflator measures the

inflation rate at the macro

economy level; it declined in

2014 by 3.1 %.

The coefficient of deflation of

non- oil GDP increased from

2.68% in 2013 to 3.39% in

2014.

THIRD: GDP Deflator

GDP deflator measures the inflation rate at the macro economy level andtargets all consumption, investment and government sectors according to

contribution of each sector to GDP. Thus, the coefficient of deflation is

considered an indirect measure of the change in the general prices level, which

is different from the cost of living index which targets the final consumption

only. It is noted that the GDP deflator declined in 2014 by 3.1%, a matter which

conforms with the trend of cost of living index.

The GDP deflator of the non-oil sector is an important economic indicator for

measurement of inflation because it excludes the impact of change of oil priceson the domestic economy. According to the latest CDSI data, the GDP deflation

increased by 3.39% compared with 2.68% in the previous year. The non-oil GDP

deflator recorded the highest annual increase level of 5.52% in 2012then

started to decline gradually in 2013 and to increase again in 2014.

Comparison of annual inflation measures in the domestic market in 2014,

shows that the annual inflation rate of the cost of living index increased by

2.7% while the annual inflation ratio in the non-oil GDP deflator increased by

3.39%. The annual change in the wholesale price index went up by 0.6%.

Table :(7) GDP Deflator




In 2014. The Prices of iron

cables, cement bags decreased,

while the prices of timber and

ready mixed concrete increased.

FOURTH: Prices of Construction Materials

The year 2014 witnessed decrease of the prices of most construction materials.Price of iron declined from SR 3094.4 per ton in 2013 to SR 2903.6 in 2014, or by

a decrease rate of 6.2%. Prices of cables declined by 4.9%, cement bag by 2%.

The price of cubic meter of timber increased from SR 2575 in 2013 to SR 2625

in 2014 while the price of cubic meter of ready mixed concrete increased

slightly from SR 205.3 in 2013 to 206.3 in 2014.

Table :(8) Average Prices of Some Construction Materials

Figure (5) : Iron and Cement Prices (2014)


2012 2013 2014

Amount Amount Amount

Ready-mixed concrete M³ 202.0 205.3 206.3 1.6% 0.5%

Iron Ton 3117.6 3094.4 2903.8 -0.7% -6.2%

Cement bag (50 k) 14.17 14.20 13.91 0.2% -2.0%

Cabling M 37.75 37.09 35.27 -1.8% -4.9%

Timber M³ 2509.8 2575.2 2625.1 2.6% 1.9%

Source: SECOR calculation based on the Department of Statistics and Information data, Bulletin of wholesale Price Index 2014.

Construction materials

Annual

change (2013)

(%)

Annual

change (2014)

(%)




There is an ascending rise in

prices since 2008, where prices

have not fallen since the peak in

that year.

FIFTH: Prices and Inflation Rate in Foodstuff and

HousingThe inflation rates in both groups of foodstuff and housing witnessed a

slowdown as the case with overall inflation rate. The following figure shows

that the overall inflation rate (yellow) follows a trend similar to that of inflation

rate of housing, figure (6/B). The slowdown of inflation does not necessarily

mean that there is a drop in prices whereas prices have really increased as well

as the overall index. There is an ascending rise in prices since 2008.It is noted

that prices have not decreased since their peak level in that year, figure (6/A(.

Figure (6) : Inflation in Foodstuff and Housing

Source: Prepared by SECOR based on CDSI data Indices of the cost of living bulletin (2014).




The international foodstuff

prices index has declined in

2014 due to the abundant

harvest and huge stock of crops

in addition to the power of the

US dollar and the drop of oil

prices.

SIXTH: Comparison of International Foodstuff Prices

with Foodstuff Prices in the KSA The international foodstuff prices index have declined in 2014 due to the

abundant harvest and huge stock of crops in addition to the power of the US

dollar and the drop of oil prices. The index of FAO is considered as an evidence

based on the activity of trade transactions to measure prices of five main food

items in international markets including sub-indices for prices of cereals, meat,

dairy, vegetable oil and sugar.

Figure(7)

: Comparison of Foodstuff Prices in the Kingdom with International Indices (Annual Change)

Source: Prepared by SECOR based on CDSI data, IMF data, and FAO data.




The trend of foodstuff prices in

the Kingdom no longer followedthe international prices trend in

terms of increase or decrease.

Prices in general, as well as prices

of foodstuff in the Kingdom

followed an ascending trend

continuously since 2008.

There is a strong relation

between the international

foodstuff prices and local

foodstuff prices .This relation

started to oscillate after 2008.

Nothing supports the

assumption of time lag betweendrop of foodstuff prices in

international and domestic

markets.

Despite the difference in the methodology of calculation between the three

indices used in the comparison CDSI, FAO and IMF foodstuff price indices

( Shaded text No.2) , the change trend in prices followed the same trend of the

three indices up to 2008 which witnessed the peak increase of prices. After that

year, the trend of foodstuff prices in the Kingdom no longer followed the

international prices trend in terms of increase or decrease. Prices in general, as

well as prices of foodstuff in the Kingdom followed an ascending trend studying

since 2008 regardless of foodstuff prices in the world. Reviewing the data

related with international foodstuff prices and local foodstuff prices since 1991

and consideration of the correlation between both, shows that there is a strong

relation between these two variables. However, the relation started to oscillate

and the local prices no longer followed the international prices trend in addition

to the weak correlation and slow response. This is evidenced in the scatter of

blue points in the figure after 2008, which represent the ratio between the

international and local prices of foodstuff, (figure 8(.

Despite the decline of world foodstuff prices since 2011, local prices are still

increasing. The price index of food and drinks increased from 140.5 in 2013 to

145.1 in 2014. Considering the assumption of time lag between drop of

foodstuff prices in international and domestic markets, inflation rates for the

first quarter of 2015 shows that nothing supports this assumption. The decline

is negligible as the inflation rate of foodstuff declined by 0.3% in March 2015.

Figure (8) : Correlation between international foodstuff prices and foodstuff prices in KSA

Source: Prepared by SECOR based on CDSI data, and FAO data.




The total value of the Kingdom's

imports increased by about 3.4%

than the previous year.

The main trade partners that theKingdom imports from are China

,USA ,Germany, Japan, South

Korea and UAE which came at the

top of countries exporting to the

Kingdom.

Inflation rates in the data of the

top ten trade partners did not

reflect an increase exceeding the

inflation level in the Kingdom with

the exception of India.

SEVENTH: Imports and Inflation Rates of Trade

PartnersAccording to the latest data of CDSI for 2014, the total value of the Kingdom's

imports reached about SR 651,9 billion, by an increase of about 3.4% than the

previous year. Concerning the ranking of the main trade partners, China came

on top of countries exporting to the Kingdom. The value of the Kingdom's

imports from China reached about SR 87,12 billion representing about 22% of

the total value of imports in 2014, by an annual increase of 11%. USA ranked

second with a value of SR 84,7 billion representing about 21% of the Kingdom's

total imports, by an annual decrease of 0.8% than the previous year. Germany

ranked third with a value of about SR 47,1 billion representing 12% of the total

value of the Kingdom's imports, by an annual increase rate of 5.1%. Japan

ranked fourth with a value of about SR 37,3 billion representing 9% of the total

value of imports, by an annual increase of 6.1%. South Korea occupied the fifth

rank with imports value of SR 32,3 billion representing 8% of total imports. UAE

ranked sixth with import value of SR 31,0 billion representing about 8% of the

Kingdom's total imports in 2014, by an annual decrease rate of about 2.9%,followed by India (seventh) with an imports value of SR 23,5 billion

representing 6% of the imports value, by an annual increase of 7.7%. France

ranked eighth with an imports value of SR 22,1 billion, or 5% followed by Italy

and Switzerland with a value of SR 21,9 billion and SR 17,9 billion respectively.

The inflation and change rates in the international prices of products and goods

imported by the Kingdom from its trade partners affect the domestic cost of

living index. Inflation rates in the data of the top ten trade partners did not

reflect an increase exceeding the inflation level in the Kingdom with the

exception of India which recorded the highest inflation rate of about 6.4% in

2014, (figure 9).




The Kingdom's foodstuff imports

increased in 2014 by 13.8%.

Despite the value of the US dollar

increased, the prices of imports

did not decrease in 2014.

CDSI data indicate that the prices of the Kingdom's foodstuff imports increased

in 2014 by 13.8% as well as prices of all components covering processed prepared

foodstuff and drinks by 16.7%, fats and grease by 1.96%, plant products by 7.7%

and animal products by 2.6%, (figure 10).

Despite the fact that there are external factors that lead to decline of the prices

of foodstuff imports, the prices of imports did not decrease whereas the value

of the Saudi Riyal increased against most of the main currencies in the world in

2014. The value of the US dollar increased by 14% against the Euro and

Japanese Yen and by 4% against the S. Korean Won, which are among the most

important countries from which the Kingdom imports products after USA andChina. It is well known that the Saudi Riyal is pegged to the US dollar since 30

years. Thus, the increase of the value of the US dollar against these currencies

means import of goods from these countries (EU and Japan) at prices lower by

14% than the previous prices and 4% lower than the prices of goods imported

from S. Korea.

Figure (9) : Inflation Rates of Trade Partners

Source: Prepared by SECOR based on different global data




However, several studies in other countries proved that the decrease of prices

of imports from trade partners does not necessarily follow the change of

exchange rates and that exporters shoulder part of the change to maintain their

shares in the market.

Generally, it is important to study the disparity between the wholesale prices

(which are linked with the international prices) and the cost of living index

which includes costs of transport, handling, distribution, marketing and profit

margins. This may help in explaining the weak relation between international

and local foodstuff prices.

Figure (1) : Prices of the Kingdom's foodstuff imports

Source: Central Department of Statistics and Information data.




Shaded Text No. 2: Methodology of Calculating Foodstuff Price Indices. FAO index of foodstuff prices comprises the average indices of five commodity groups: meat, dairy, cereals, fats and grease,

sugar with calibration of the average exports share for each group for the period 2002-2004. Generally, the overall index includes

73 price levels which are taken into account by FAO commodity experts as a criterion of international prices of food items. Each

sub-index represents the relative average of the prices of goods indicated in the group. The price of the main period comprises

the averages of the prices of the period 2002-2004. The index of meat prices is calculated from the average prices of four types

of meat calibrated according to their average international share in trade exports for the period 2002-2004. The commodities

include two products of poultry and seven products of meat. The index uses 27 price levels. In case of existence of more than one

price level for one type of meat, then it is calibrated according to its assumed fixed trade share. The index of the prices of dairy

products comprises price level of butter, full fat milk powder, skimmed milk powder and cheese, with calibration of the average

according to the international average of the shares of international exports for the period 2002-2004.

The index of cereal prices is calculated from the price levels of corn exports, 16 price levels of rice, the index of wheat prices,

issued by the international Cereal Council, which in itself represents the average of 10 different wheat price levels. Rice price

levels are combined in four groups comprising high and low quality types of rice. Within each group, the simple mean of prices is

computed. Following that, the average relative prices of each of the four types are combined through calibration according to the

assumed trade share of each type. In the ensuing step, the wheat price index issued by the international Cereal Council (after

transfer to the basic price for 2002-2004) is combined with the relative prices of corn, along with the average relative prices

calculated for the rice group as a whole, as well as calibration of each commodity with its average share in trade exports fo r 2002-

2004.

The index of vegetable oil comprises the average of 10 different oils calibrated according to its average share in each oil product

in the trade exports for the period 2002-2004. The index of sugar prices is derived from the international sugar agreement pricesconsidering the period 2002-2004 as a base period.

.2 The cost of living index used in the Kingdom follows the composition of the international classification of individual

consumption according to purpose (COICOD) - more than 160 food items for the base year 2007. In the context of i ts role, CDSI

implements a number of programs through which it monitors trends of prices of commodities and services as well as the

changes that take place in this respect from a period to another in accordance with latest internationally adopted statistical

practices and approaches. The program of cost of living index represents one of the most important programs which monitor

trends of the prices of commodities and services in the Kingdom's markets. The contents of the basket of the commodities and

services entered in the cost of living index computation are distributed over 12 main sections. The percentage share of these

sections on the part of consumer varies as reflected in the households expenditure and income survey (2007). The results ofthis survey show that more than 40% of the percentage share of the main expenditure sections are represented in two sections:

the food section ranks first in terms of percentage share constituting 21.7% of total percentage share of the main sections which

comprise the overall cost of living index. Therefore, the food items section constitutes one of the main sections with important

presence in all programs, research and studies prepared by CDSI according to their importance to the consumer in the Kingdom.

The housing, electricity, water and fuel section ranks second in terms of percentage share after the food items section,

constituting 20.5% of total percentage share of the cost of living index. The rankings of the sections of house equipment,

maintenance works, clothing and footwear, communications, miscellaneous goods and services, hotels and restaurants,

recreation and culture, education, health and tabaco products follow a sequence according to their percentage shares.




3

LABOUR FORCE




Around 13.5 million Saudis are

in the working age, about 7.1

million children and about 741

thousand above the age of 64

years.

The number of Saudi new

entrants to the labor market

annually are more than 237

thousand men and women in

2014, while more than 99

thousand were outside the labor

force in the same year.

The growth rate of employment

in the private sector reached

about 14.18% in 2014, whereas

employment rate in the

government sector grew by

3.28% in 2014.

Despite employment in the

private sector accelerated, the

unemployment rate in 2014

remained at the same level of

the previous year at 11.7%.

The number of population in the Kingdom in 2014 has been estimated at about

30.7 million of whom 20.7 million Saudis while non-Saudis constitute more than

10 million. Around 13.5 million Saudis are in the working age, about 7.1 million

children under the age of 14 years and 741 thousand above the age of 64 years.

The number of Saudi new entrants to the labor market annually exceeds the

number of those leaving this market. Almost more than 237 thousand men and

women entered the labor force in 2014 while more than 99 thousand left the

labor force in the same year. This growth in ratio of entrants to the labor forceconstitutes a demographic pressure, and does not consist with the volume of

available jobs in the national economy. The increase in the number of

unemployed Saudis who entered the labor force in 2014 has been estimated at

28,772 persons, these increasing the number of unemployed Saudis from

622,533 in 2013 to 651,305 in 2014. The increase in the number of unemployed

Saudis in 2013 was estimated at 19,680 persons.

The growth rate of employment in the private sector accelerated in 2014 to reach

about 14.18% compared with 13.50% in the previous year. Employment rate in

the government sector grew by 3.28% in 2014 compared with 6.40% in the

previous year. However, growth of employment in the private sector has not

resulted in the reduction of unemployment rate of Saudis. In 2014, the

unemployment rate remained at the same level of the previous year at 11.7%.

The year 2014 witnessed a significant and unprecedented increase in the number

of Saudis not interested in jobs by 297% from 14,103 in 2013 to 55,985 persons

in 2014 with males constituting 43% and females 57%. The reason for thissignificant increase ratio in 2014 is attributed to refrainment of the youth from

occupying the low skill jobs offered to them by private sector companies which

do not consist with their qualifications whereas most of them are holders of

university degrees. It is noteworthy that, in light of the increased expenditure on

education and training, the private sector's contribution is still below the aspired

level regarding provision of job opportunities to absorb the skilled national

manpower who enjoy higher educational levels.

3. Labour force




The private sector enjoys limited

capacities in terms of solving the

problem of unemployment as

most of the jobs provided by the

private sector lack skills and

whereas the national labor are

skilled cadres.

The opportunities for females in

the private sector are limited

where the unemployment rate

among them is the highest.

This is attributed to the fact that most of the private sector jobs are for unskilled

labor with below secondary education recruited from abroad .

Study of the current condition of the labor market and the manpower survey

data published by CDSI indicate that the private sector enjoys limited

capacities in terms of employment and that it is unable to solve the problem of

unemployment for two reasons: first: most of the jobs provided by the private

sector lack skills and do not require high education levels, a matter which has

adverse impacts on replacement of expatriate labor by Saudis and employment

of national labor. Most of the national labor are skilled cadres, while most of

the unemployed persons are holders of university degrees. Second: fields andopportunities in this sector are limited whereas 88% of the new entrants to the

labor market in the private sector were males in 2014 while the females

accounted for only 12%. The unemployment rate among females is the highest

standing at 32.8% while that of males reached only 5.9% in 2014.

Unemployment rates in the Saudi economy remain a complicated issue which

raises concern of public opinion. The government gives priority to this issue

and adopts multi – dimensional strategies to reform the labor market, increase

employment of Saudis in the private sector and improve the levels of

productivity. To review the current condition in a better way, it is particularly

important to understand the nature and characteristics of the Saudi population

in the working age including those entering and leaving the labor force. It is

also important to understand the nature and characteristics of the unemployed

Saudis.




The economic participation rate

of the Saudi population in the

working age reached 41% while

59% of Saudi population

remained outside the labor force.

The participation rate of females

in labor force in low, but it isincreasing by higher percentage

than males' participation

FIRST: Saudi Population in the Working Age

The economic participation rate of the Saudi population, in the age group 15 years and above, reached 41% while 59% of Saudi population remained outside

the labor force. While the participation rate of males in the labor force stood at

65%, the participation rate of females (percentage of female Saudis in the labor

force to the total female Saudis in the working age) increased from 16.4% in

2013 to 17.6% in 2014.

The Saudi labor force increased by 4% in 2014 while the increase in the

percentage of those leaving the Saudi labor force reached only 1%. This

indicates the accelerated growth of the Saudi laborforce, and that it is

necessary to take all possible measures to job opportunities to the citizens,

(table 9). The participation of females in the labor force constitutes a very low

percentage compared with the participation rate of males. However, it is noted

that the participation rate of females in recent years has increased from 14% in

2011 to 18% in 2014, (figure 11).

Table :(9) Saudi Population Within and Outside Labour Force

Figure () : Economic Participation Rate of Saudis

Source: Prepared by SECOR based on CDSI data, Labour Force Survey 2011-2014 (the second session).

Male Female Total Male Female Total Labour Force 65% 17% 41% 65% 18% 41% 4%

Out of the Labour Force 35% 83% 59% 35% 82% 59% 1%

Total 100% 100% 100% 100% 100% 100% 3%

Saudi population2013 2014

Annual Change

(%)

(2013 -2014)

Note: The Saudi population 15 years and above.

Source: SECOR calculations based on the Central Department of Statistics and Information data, Labour Force Survey 2013-2014 (the second session).




The Saudi labor force in 2014

reached about 5.6 million

persons, of whom 79% are males

and 21% females.

The number of unemployed

Saudis reached 651,305 persons

in 2014.

A. Saudi Labor Force

The Saudi labor force in 2014 reached about 5.6 million persons, of whom 4.4million males, or 79%, and 21% females. The employment rate of Saudi population

(at 15 years of age and above) reached 88.3% while the unemployment rate among

the Saudi population (in the working age) reached 11.7%, or 651,305 persons.

The youth category in the age group 20-39 years constitutes two thirds of the

Saudi labor force. In light of the growing number of population, where the youth

group constitutes the largest portion, there exist demographic pressures in

addition to the necessity of giving priority to provision of job opportunities to the

new entrants to the labor force annually.

Table :(1) Saudi Labour Force by Education Status

Figure (2) : Saudi Labor Force by Age Group (2014)

Source: Prepared by SECOR based on CDSI data, Labour Force Survey 2014 (the second session).

Male Female Total Male Female Total pre-secondary 22% 1% 23% 19% 1% 21% -6% Secondry or Equivalent 30% 3% 33% 33% 3% 36% 13% Diploma 7% 2% 10% 7% 2% 10% 2% University and higher education 20% 14% 34% 19% 15% 34% 3% Total 80% 20% 100% 79% 21% 100% 4%

2013

(% Of total labor force)

pre secondary includes: (Illiterate, reads and writes, Primary, Intermediate).

Educational StatusAnnual Change

% (2013 -2014)

2014

University education and above includes: (Bachelor Degree, High Diploma / Master Dgree, Doctorate).





Holders of secondary stage

certificates represent the highestratio of the Saudi labor force

followed by holders of university

degrees or above.

The highest rate in the labor force

is concentrated among the male

holders of secondary certificates,

whereas the largest ratio of

females is concentrated in

holders of university degrees.

The number of employed Saudis

holders of secondary certificates

has increased while the ratio of

holders of university degrees and

above has declined in 2014.

Holders of secondary stage certificate or equivalent represent the highest ratio

of the Saudi labor force 36% followed by holders of university degrees or above

34% of the Saudi labor force. While the highest rate in the labor force is

concentrated among the male holders of secondary certificates or equivalent

33%, the largest ratio of females is concentrated in holders of university

degrees and above (15% of total female labor force). The large ratio of the

entrants to the labor force in 2014 comprised holders of secondary certificates

or equivalent 13%. On the other hand, Saudi labor force holders of below

secondary certificates dropped by 6% whereas the ratio of employed and

unemployed Saudis in this group has declined. The ratio of employed Saudis

holders of below secondary certificates decreased from 22.98% in 2013 to

21.32% in 2014. Moreover, the ratio of unemployed Saudis holders of below

university certificates declined from 8.51% in 2013 to 7.42% in 2014, (table10).

The number of employed Saudis holders of secondary certificates has increased

while the ratio of holders of university degrees and above has declined in 2014.

The ratio of the unemployed holders of university degrees to the total

unemployed Saudis increased from 49% in 2013 to 51% in 2014. The ratio of the

unemployed holders of secondary certificates increased from 33% in 2013 to

33.4% in 2014, (figure 13).

Figure (3) : Employed and Unemployed Saudis Holders of Secondary, University Degrees and Above (Comparison)





About 56% of the employed

non-Saudis are holders of below

secondary certificates.

Most jobs of non-Saudis do not

require high skills.

Replacement of unskilledexpatriate labor by skilled

national labor is wastage of

human capital.

The challenge in the labor

market lies in creating high skill

jobs commensurate with

education level of the Saudi

labor force.

Review of the percentage distribution of the employed non-Saudis by

education level shows that the largest ratio represents holders of below

secondary certificates, 56% of total employed non-Saudis while holders of

secondary certificates represent 18% of the total. Holders of university degrees

and above represent 21% of the total employed non-Saudis. While the ratio of

employed non-Saudis holders of below secondary certificates declined in 2014,

the ratio of employed non-Saudis holders of university degrees and above

increased in the same year, (figure 14).

In light of the current structure of the Saudi labor market where most jobs of

non-Saudis do not require high skills and could be replaced by Saudi labor with

low education level, the Saudi economy can not provide (through replacement

process) sufficient job opportunities for national skilled labor who hold higher

education degrees. In light of the increased expenditure on education and

training and the growing number of graduates with university certificates, it is

expected that this status could cause more pressures as well as increased

unemployment rates. Replacement of unskilled expatriate labor by skilled

national labor constitutes wastage of human capital. Thus, the challenge in the

labor market lies in raising efficiency of the economy including improvementof investment environment and direction of investments in the private sector

to create high skill jobs commensurate with education level of the Saudi labor

force and absorption of skilled national labor in the economy.

Figure (4) : Employed non-Saudis by Education Level





Employment in the private sector

grew in 2014 by 14.18% compared

to 3.27% in the government sector.

The Saudi new entrants in the

private sector labor market in 2014

reached 155 thousand persons of

whom 88% are males.

The work fields and opportunities

for females in the private sector are

limited, whereas the largest

percentage of unemployment is

among females.

The largest portion of Saudis work in the government sector representing 66% of

the total employed Saudis, with males constituting about 53% and females about

13%. Growth of employment in the private sector accelerated in 2014 to reach

about 14.18% compared with 3.27% in the government sector. Moreover, the

growth rate of total employed Saudis increased by 4.43% in 2014, (table 11).

The number of Saudi employees in the private sector increased substantially from

1.09 million in 2013 to 1.25 million in 2014 while the number of employees in the

government sector increased from 3.15 million in 2013 to 3.25 million in 2014.

Review of the percentage distribution of new entrants to the labor market in the

government and private sectors in 2014 shows the increase of the number of

employees in the private sector which reached 155 thousand of whom 136

thousand are males, or 88% while the number of females increased by about 18

thousand, or not more than 12% of the total increase of the number of employees

in the private sector. On the other hand, the number of employees in the

government sector increased by about 103 thousand employees most of whom

are (60 thousand, or 58%), while the number of males reached 43 thousand, or

42%, (figure 15). It is well known that the fields and opportunities of work in the

private sector are limited for females. Thus, the private sector, in its currentstatus, could not be relied to solve solving the unemployment problem whereas

the largest ratio of the unemployed comprises females.

Table :() Employed Saudis by Economic Sectors

Male Female Total Male Female Total

Government Sector 54.14% 12.54% 66.68% 52.71% 13.23% 65.94% 3.27%

General works Sector 2.92% 0.05% 2.96% 3.18% 0.02% 3.20% 12.97%Private Sector construction 20.57% 2.56% 23.13% 22.46% 2.82% 25.29% 14.18%

labour work for there own 6.55% 0.14% 6.69% 5.00% 0.11% 5.11% -1.36%

Family Sector 0.17% 0.01% 0.18% 0.05% 0.08% 0.13% -0.05%

Non-profitable organization 0.15% 0.12% 0.27% 0.14% 0.09% 0.23% -0.03%

House labour 0.05% 0.00% 0.05% 0.04% 0.00% 0.04% -0.01%

Other 0.03% 0.00% 0.03% 0.06% 0.01% 0.07% 0.04%

Total 84.58% 15.42% 100.00% 83.64% 16.36% 100.00% 4.43%


(% Of total Saudis employed by economic sectors)

Annual Change

% (2013 -2014)Sectors

2013 2014




The increase of employment in

the private sector could be

attributed to the labor market

reforms in the Kingdom.

Most of Saudis are concentrated

in the activity of general

administration, defense and

social security followed by thoseemployed in the education

sector.

The non-Saudi workers are

concentrated in the activities of

retail and wholesale trade and

construction.

The increase of employment in the private sector could be attributed to the

reforms carried in the labor market over the past years. These reforms included:

expanding the scope of wage benefits, providing incentives to Saudi labor to

continue work in private sector and implementing reforms for work hours in the

private sector. These reforms also included application of the unemployment

insurance system with the contribution of all employers and workers to enhance

the social safety net for Saudi labor. These reforms have resulted in the increased

employment of Saudi labor in the private sector.

Review of the distribution of employed Saudis and non-Saudis by activities shows

that most of Saudis are concentrated in the activity of general administration,

defense and social security where their ratio reached 35.8% of the total employed

Saudis followed by those employed in the education sector by 23.6%. The lowest

ratio represents the group employed in activities of international organizations

which reached 0.1%. About 42% of males work in the field of general

administration, defense and social security while females are concentrated in

education and health sectors, by 72% and 13% respectively. The non-Saudi

workers are concentrated in the activity of retail and wholesale trade 22% and

construction activity 21%. The retail, wholesale as well as hotels and restaurantssectors are adequate targets for Saudization.

Figure (5) : Percentage Distribution of New Entrants to the Labor Marketin the Government and Public Sectors (2014)





Most of Saudis work in the

services occupations as well as a

significant ratio of non-Saudis.

Most of the non-Saudis work in

assistant basic engineering

occupations by 15.8% of total

employment in 2014.

The ratio of Saudis working insale occupations in 2014

reached about 2.7%, while the

ratio of non-Saudis reached

8.7% of the total employment.

Most of Saudis work in the services occupations as well as a significant ratio of

employed non-Saudis. The ratio of non-Saudi labor in services occupations

increased from 22.27% in 2013 to about 24% in 2014. Most of employed non-

Saudis work in assistant basic engineering occupations. Their number reached

1,745,059 persons or 15.8% of total employed in 2014. Saudis do not constitute

more than 1.6% of the total employment in these occupations.

The year 2014 witnessed a minor increase in the ratio of Saudis working in sale

services form about 5% in 2013 to 6.14% in 2014. This increase may be attributed

to the increased number of Saudi women working in commercial centers and

shops which have recently been feminized. The policies of the labor market

failed in reducing the number of non-Saudis working in sale services as well as

replacement of expatriate labor by Saudis. The ratio of non-Saudis working in

sale services increased from 14.21% in 2013 to 16% in 2014. The ratio of Saudis

working in sale occupations in 2014 reached about 2.7% of total employment,

while the ratio of non-Saudis reached 8.7% of the total employment, (figure16).

Figure (6) : Percentage Distribution of Employed Saudis and non-Saudis by Professions (2014)





Saudization ratios improved in

international organizations and

institutions as well as arts and

recreation sectors in 2014.

Saudization ratios declined in

the sectors of: electricity, mining,

and real estate activities.

B. Comparison of Saudization Ratios for 2013 and 2014

A substantial improvement was achieved in Saudization ratios in international

organizations and institutions as well as arts and recreation sectors in 2013 and

2014. The Saudization ratio increased in 2014 regarding the sectors of: water,

manufacturing industries, financial activities, communications, retail and

wholesale trade. On the other hand, Saudization ratios declined in the sectors of:

electricity, mining, trade activities, agriculture, health, transport and hotels and

restaurants. It is noteworthy that the decline of the ratio of Saudization in these

sectors does not necessarily mean decline of the number of Saudis but may be

attributed to increased employment of Saudis in most sectors, but this increase hasbeen associated with increased number of non-Saudis, a matter which led to

decrease of the Saudization ratios. For example, the number of Saudis in the health

sector increased by 49,862 persons but the number of non-Saudis also increased by

79,988 persons. In the hotels and restaurants sector, the number of Saudis

increased by 96,73 while the number of non-Saudis increased by 108,715 persons.

Figure (7) : Saudization ratios in Economic Sectors





Saudi females constitute 70% of

the total Saudi population out of

the labor force while males

constitute 30%.

The number of Saudi population

who are not interested in jobs

increased from 14,103 persons

in 2013 to 55,985 persons in

2014.

There is a refrainment by the

Saudi youth from lower skill

jobs offered to them which do

not consist with their

qualifications.

C. Saudi Population Out of the Labor Force

Saudi females constitute 70% of the total Saudi population out of the laborforce while males constitute 30%. Most of the Saudi population out of the labor

force lies within the category of holders of below secondary certificates, by a

share of 58%, followed by holders of secondary certificates or equivalent, by

36%. The annual growth rate of those leaving the labor force who hold

university degrees and above has declined by 6% while the annual growth rate

of Saudi population out of the labor force reached 1% in 2014.

More than 7,967 million Saudis in the working age are out of the labor force.

Housewives constitute about half of the Saudi population out of the labor forcewhile students who are studying or on training programs constitute about 39%.

Despite the low level of the ratio of Saudi population who are not interested in

jobs, constituting only 1% of the total, there is a significant increase in the

growth rate of this group, the number of whom increased by 297% from 14,103

persons in 2013 to 55,985 persons in 2014. Males constitute 43% while females

constitute 57% of this group. The reason behind the increasing growth rate of

this group is the refrainment of the Saudi youth from lower skill jobs offered to

them by the private sector companies which do not consist with their

qualifications whereas most of them are holders of university degrees.

Table :(2) Saudi Population out of Labor Force by Status


In school or training 52% 48% 39% 52% 48% 39% 0.3%

Housekeeping 0% 100% 49% 0% 100% 48% -1%

Retired or Over age 90% 10% 8% 87% 13% 9% 9%

Disability or handicap or health reason 65% 35% 2% 59% 41% 2% 14%

Unwillingness to work 70% 30% 0.18% 43% 57% 1% 297%

Others 62% 38% 1% 52% 48% 1% 9%

Total 30% 70% 100% 30% 70% 100% 1%

Note: The Saudi population in the age of 15 years and above.

Status2013 2014 Annual Change%

(2013 -2014)





Unemployment rate in 2014

remained at its level of 2013

which reached 11.7%.

SECOND: UnemploymentThe various programs and reform efforts in the labor market have contributed

to increase of employment growth rate in the private sector in 2014. Due to

increase of the number of Saudi new entrants to the labor market,

unemployment rate in 2014 remained at its level of 2013 which reached 11.7%.

The unemployment rate increased slightly among the Saudi youth group (20-

29 years) from 28.4% in 2013 to 28.6% in 2014. A slight decline took place in the

unemployment rate of both males and females from 6.1% in 2013 to 5.95% in

2014 for males and from 33.2% in 2013 to 32.8% in 2014 for females.

Table :(3) Unemployment Among Saudis


Unemployment Rate 6.1% 33.2% 11.7% 5.9% 32.8% 11.7% 0.0%

Unemployment Rate in young category (20-29) 17.0% 59.1% 28.4% 16.3% 61.0% 28.6% 0.3%

Unemployment rate pre-secondary 3.8% 16.4% 4.4% 3.7% 14.2% 4.3% -0.1%

Unemployment Rate of secondary or Equivalent 8.5% 45.9% 12% 7.4% 44.9% 10.8% -0.7%

Unemployment Rate of secondary diploma 9.0% 19.2% 11% 7.7% 17.1% 10.0% -1.4%

Unemployment Rate of university and higher education 4.2% 34.3% 16.6% 5.0% 34.0% 17.5% 0.9%


pre secondary includes: (Illiterate, reads and writes, Primary, Intermediate).

University education and above includes: (Bachelor Degree, High Diploma / Master Dgree, Doctorate).

Annual Change%

(2013 -2014)

20142013Unemployment Rate




Unemployment rate amongholders of university degrees

increased to 17.5% in 2014

compared with 16.6% in 2013.

The decline of unemployment rate among females is attributed to the

increased employment of Saudi females. The participation rate of the Saudi

women increases at a rapid pace than that of males. Unemployment rate

among holders of university degrees increased to 17.5% in 2014 compared with

16.6% in 2013. Unemployment rate is the highest in this group according to

educational level. On the other hand, unemployment rate declined among

Saudi individuals holding lower educational levels.

Figure (8) : Unemployment Rate Among Saudis





4

FOREIGN TRADE




Total value of exports of the

Kingdom stood at 47.5% of GDP,

and total value of imports

amounted to 34% of GDP.

The current account surplus

declined to 10.3% of the GDP in

2014 compared to 18.2% in

2013.

The value of non-oil exports

increased by 8.4% in 2014

Total value exports of the Kingdom stood at about SR 1,32 trillion in 2014 or

about 47.5% of GDP. On the other hand, total value of imports amounted to SR

957,6 billion, or 34% of GDP. The current account declined in 2014 as a result

of decline in revenues of oil exports thereby bringing down the current account

surplus to 10.3% of the GDP in 2014 compared to 18.2% in 2013. The surplus of

the current account is expected to decrease further in the future as a result of

decrease in oil prices. Moreover, the merchandise trade of the Kingdom

declined from SR 2.1 trillion in 2013 to SR 1.9 trillion in 2014. As a measure of

degree of economic openness, the merchandise foreign trade of the Kingdom

amounted to 69% of GDP in 2014 compared to 73% in 2013 .

FIRST: Merchandise Exports of the Kingdom

Total value of merchandise exports of the Kingdom decreased by 8.9% from

SR 1,4 trillion in 2013 to SR 1,28 trillion in 2013. Value of oil exports amounted

to SR 1,06 trillion in 2014 or 11.6% down compared to value of oil exports in2013. This decline in the value of oil exports is mainly attributed to decrease of

oil prices in the last two months of 2014 despite increase of oil production.

Crude oil constitutes 73% of total oil exports. The value of exports of refined

products increased by 22% from SR 104.6 billion in 2013 to SR 127,6 billion in

2014.

On the other hand, the value of non-oil exports increased by 8.4% in 2014

recording SR 186,6 billion. Exports of petrochemicals increased by 9.2% toabout SR 143,6 billion while the value of exports of building materials,

agricultural products, foodstuff and re-exported goods decreased by 2.2%

(table 14).

4. Foreign Trade




Table :(4) Merchandise Exports of the Kingdom

Figure (9) : Exports, Imports and Balance of Current Account

Source: Prepared by SECOR based on CDSI and SAMA data

2013 2014Amount Amount

Oil Exports 1,207,080 1,066,590 83% -11.6%

Crude oil 1,102,478 938,959 73% -14.8%

Refined products 104,602 127,631 10% 22.0%

Non-oil Exports 172,115 186,627 15% 8.4%

Petrochemicals 131,509 143,647 11% 9.2%

Construction materials 11,753 13,704 1% 16.6%

Agricultural, animal and food products 12,628 13,405 1% 6.2%

Other goods 16,226 15,871 1% -2.2%

Re-Exported goods 30,328 30,403 2% 0.2%

Total 1,409,523 1,283,620 100% -8.9%

Source: Central Department of Statistics and Information 2014.

Items

)Million Riyals(

% Share %AnnualChange




The value of imports increased

by 3.4%, imports of electric

devices and equipment came

first with a share of 26% of total

imports.

SECOND: Imports by Main Components

Strong demand for imports continued due to ongoing implementation ofinfrastructure projects and the steady growth of domestic consumption. The

value of imports increased by 3.4% from SR 630,5 billion in 2013 to SR 651,8

billion in 2014.

Based on the detailed data of imports value, imports of electric devices and

equipment came first with a share of 26% of total imports or 3.5% up from the

value of the previous year. Imports of transport equipment came next

accounting for 17% of total imports or 1% up from that of the previous year.

Imports of foodstuff occupied the third rank by 14% of total imports or 1.4% upfrom that of the previous year. Imports of base metals and related products

occupied the fourth rank with a share of 12% or an increase of 2.1% compared

to the previous year. Imports of chemicals and mineral products came in the

fifth rank with a share of 12% and were 8.2% up compared to the previous year.

Timber and jewelry imports occupied the sixth rank with a share of 4% and were

slightly up 0.9% compared to that of the previous year. Finally, imports of

textiles and clothing occupied the last rank with a share of 3% of total imports

and were 7.1% up compared to their value in the previous year (table 15(.

Table :(5) Imports of the Kingdom by Main Components

2013 2014

Amount Amount

Machines, appliances and electrical equipment 165,230 171,011 26% 3.5%

Foodstuffs 90,341 91,626 14% 1.4%

Chemical and metal products 72,244 78,191 12% 8.2%

Textiles and clothing 18,880 20,229 3% 7.1%

Metals and related products 78,102 79,759 12% 2.1%

Wood and jewelry 24,909 25,131 4% 0.9%

Transport equipment 107,552 108,610 17% 1.0%

Other goods 73,324 77,317 12% 5.4%

Total 630,582 651,874 100% 3.4%

)Million Riyals(

% Share%Annual

Change


Items




The ten main countries which

imported from the Kingdom in

2014 are USA, China .Japan,

South Korea. India, Singapore,

Taiwan, UAE, Bahrain and

France.

The ten main countries which

exported to the Kingdom in

2014. Are China, USA, Germany,

Japan Korea, UAE, India, France,

Italy and Switzerland.

THIRD: Exports and Imports to and From the ten

Main Trade Partners of the Kingdom Exports data show the ten main countries which imported from the Kingdom in

2014. The USA came first with 18% of the total exports of the Kingdom to the

most important ten trade partners, followed by China and Japan with shares of

17.5% and 17% respectively; Korea 13%; India 12%; and Singapore, Taiwan and

the UAE with shares of 5% each. Finally, came Bahrain and France with shares of

4% and 3% respectively (table 16).

On the other hand, imports data show the ten main countries which exported

to the Kingdom in 2014. China came first with a share of 22% of total imports ofthe Kingdom from the main ten trade partners, followed by the USA, the

percentage share of which declined from 22% in 2013 to 21% in 2014. Germany

occupied the third rank with a share of 12%; followed by Japan in the fourth

rank, with a share of 9%; Korea, with the share of 8% (the value of imports from

Korea decreased by 10.2% in 2014). The UAE occupied the sixth rank with 7.9%.

It is noteworthy that the value of the Kingdom's imports from the UAE

decreased by 2.9% in 2014 compared to 2013. Finally came India, France, Italy

and Switzerland with shares of 6%, 5%, 5% and 4% respectively (table 17).

Table (6) : Exports of the Kingdom to the ten main trade partners

Amount % Share Amount % Share

United States 199,060 19% 162,460 18% -18.4%

China 188,936 18% 160,685 18% -15.0%

Japan 179,825 17% 156,821 17% -12.8%

South Korea 131,750 13% 123,557 13% -6.2%

India 129,444 13% 113,829 12% -12.1%

Singapore 43,876 4% 46,798 5% 6.7%

Taiwan 51,921 5% 43,918 5% -15.4%

The United Arab Emirates 38,896 4% 43,694 5% 12.3%

Bahrain 38,081 4% 34,559 4% -9.2%

France 32,191 3% 31,662 3% -1.6%

Total 1,033,980 100% 917,983 100% -11.2%

%Annual

Change

2013 2014

)Million Riyals(


Countries




Table :(7) Imports of the Kingdom from the ten main trade partners

Figure (21) : Exports and Imports to and from the Kingdom and the Ten Main Trade Partners



China 78,488 20% 87,122 22% 11.0%

United States 85,376 22% 84,730 21% -0.8%

Germany 44,812 11% 47,093 12% 5.1%

Japan 35,153 9% 37,306 9% 6.1%

South Korea 36,018 9% 32,336 8% -10.2%

The United Arab Emirates 31,940 8% 31,019 8% -2.9%

India 21,822 6% 23,509 6% 7.7%

France 19,663 5% 22,132 5% 12.6%

Italy 20,374 5% 21,929 5% 7.6%

Switzerland 19,740 5% 17,953 4% -9.1%

Total 393,386 100% 405,129 100.0% 3.0%

Countries


%AnnualChange

2013 2014

)Million Riyals(




China has occupied the first

rank in non-oil exports of the

Kingdom.

The value of total non-oil

exports increased from 27% in

2013 to 29% in 2014.

FOURTH: Non-oil Exports of the Kingdom

Data pertaining to non-oil exports of the Kingdom to the ten main tradepartners in 2014 show that China has occupied the first rank with a share of 23%

which is 1.5% lower compared to the previous year. The UAE, India, Singapore,

Turkey, Egypt and Jordan came next followed by Belgium, Bahrain and Qatar.

The value of total non-oil exports increased from SR 113,886 million in 2013 to

SR 121,509 million in 2014, or 6.7% up. As a measure of economic

diversification, the ratio of non-oil exports to imports increased from 27% in

2013 to 29% in 2014.

Table (8) : Non-Oil Exports of the Kingdom to the ten main trade partners

Figure (2) : Ratio of Non-Oil Exports to Imports



China 27,858 24% 27,441 23% -1.5%

The United Arab Emirates 24,147 21% 23,846 20% -1.2%

India 10,326 9% 14,364 12% 39.1%

Singapore 12,791 11% 13,863 11% 8.4%

Turkey 6,795 6% 8,000 7% 17.7%

Egypt 6,679 6% 7,894 6% 18.2%

Jordan 7,034 6% 7,380 6% 4.9%Belgium 6,581 6% 6,744 6% 2.5%

Bahrain 5,968 5% 6,149 5% 3.0%

Qatar 5,707 5% 5,828 5% 2.1%Total 113,886 100% 121,509 100% 6.7%


Countries

)Million Riyals(

2013 2014 %Annual

Change




Balance of current account

recorded a surplus of SR 288,4

billion in 2014 compared with a

surplus of SR 507,9 billion in

2013.

FIFTH: Balance of Current Account Balance of current account recorded a surplus of SR 288,4 billion in 2014

compared with a surplus of SR 507,9 billion in 2013, or 43.2% lower. This

surplus, as a percentage of the GDP, decreased from 18.2% in 2013 to 10.3% in

2014 mainly due to decrease of the value of oil exports from 1207080 million in

2013 to SR 1,066,590 million in 2014, or 11.6% down, in addition to increase of

imports from SR 862,128 million in 2013 to SR 957,686 million in 2014, or

almost 11.1% up, (table 19(.

Table :(9) Current Account

2013 2014

amount amount

Oil exports 1,207,080 1,066,590 -11.6%

Other exports 246,585 262,940 6.6%

Imports 862,128 957,686 11.1%

Trade Balance 591,537 371,844 -37.1%

The balance of intangible items -83,628 -83,410 -0.3%

Current account balance 507,909 288,434 -43.2%

(Percentage of GDP) 18.2 10.3 -43.4%

Source: Central Department of Statistics and Information 2014, SAMA 2014.

)Million Riyals(

Items Annual

Change %




The transfers of the expatriate

labor represents the main

source of outflows from the

Saudi economy in the account

of intangible items.

The pace of transfers was slower

in 2014 due to tightenedrestrictions on issuance of visas.

Growth of transfers made by the

expatriate labor peaked in 2008

where the annual change

reached 33.1%.

SIXTH: External Transfers oth the Expatriate Labor

Residing in the KingdomThe Kingdom is ranked the second in terms of transfers made by the expatriate

labor. It is preceded only by the USA where such transfers average USD 51,8 billion

compared with the Kingdom where the value of transfers amounted to USD 28

billion (SR 105 billion). The transfers of the expatriate labor represents the main

source of outflows from the Saudi economy in the account of intangible items.

However, the pace of transfers was slower in 2014 due to tightened restrictions on

issuance of visas as part of the comprehensive reform of the labor market .

Growth of transfers made by the expatriate labor peaked in 2008 when

implementation of many new projects necessitated recruitment of large numbers

of expatriate labor. Labor force survey data indicate the increase of the number of

non-Saudi employment from 4,143,600 workers in 2007 to 4,260,631 workers in

2008, i.e. an increase of 117,031 expatriate workers compared with an increase of

52,186 workers in the Saudi employment. Moreover, transfers made by expatriate

labor increased substantially in 2013. However, this increase was not due to

increase in the number of non-Saudi workers. According to labor force survey data,

non-Saudi workers increased from 5,992,953 to 6,011,996 workers in 2013, or an

increase of 19,043 workers. The increase of transfers in that year was mainly

attributed to the clearance of accounts for transfers of money abroad due to the

correction of the status of illegal labour at the period when expatriate labour were

given there months to correct their status.

Figure (22) : Transfers of Expatriate Labor and Rate of Annual Change

Source: Prepared by SECOR based on SAMA data.




5

OIL MARKET




The average international

demand for oil increased by

1.06%, while the average

international supply increased

by 2.39% in 2014

The surplus of the international

oil balance led to the drop of oil

prices in 2014 .

The international demand for oil

was fully supported by non-

OECD countries while oil

supplies grew as a result of the

increased production of US rock

oil.

During 2014, the international oil market witnessed significant changes due to the

decline of the growth of the international economy, slowdown of growth of demand

for oil and the increased supply of this resource. According to the data of OPEC, the

average international demand for oil increased by 1.06% to reach 91.2 million barrels

per day while the average international supply increased by 2.39% to reach 92.22

million barrels per day.

The surplus of the international oil balance which stood at about 1.02 million barrels

per day, and the low level of demand led to the drop of oil prices in 2014. The price ofBrent crude declined by 8.78% to reach $ 99.08 per barrel compared with about

$ 108.62 in 2013. On the other hand, the average price of Arabian light crude dropped

to $ 97.18 per barrel, by a decline ratio of 8.78%, compared with about $ 106.3 in 2013.

According to the data of OPEC, the international demand for oil increased in 2014 to

reach 91,2 million barrels per day compared with 90,2 million in 2013. This demand

was fully supported by non-OECD countries, particularly China, Middle East

countries, Latin American countries and African countries. On the other hand,

average demand from Europe and Pacific Ocean countries has declined.

Oil supplies from non-OPEC countries grew by 3.85% to reach 56.35 million barrels

per day compared with about 54.26 million in 2013. This growth of supplies is mainly

attributed to the increased production of US rock oil. The US total production of

crude oil, gas liquids and fossil fuel increased from 11 million barrels/day to 12.7

million barrels/day while production of crude oil went up from 7.5 million

barrels/day to 8.7 million including 3.5 million barrels/day of rock oil.

Despite the accelerated growth of US production of light sweet crude over the pastfew years, the discontinuity of production in a number of countries resulted in the

delay of the impact of the said increase in US supplies on oil prices. The US production

increased by about 3 million barrels/day over the past five years since the third

quarter of 2009. However, the discontinuity of production in five countries (Libya,

Yemen, Sudan, Iran and Syria), the total production of which stands at 2.4 million

barrels/day, has provided alternative markets for the US oil supplies in an

easy way.

5. Oil Market




The year 2014 witnessed the

beginning of the decline of oilprices. In particular, the largest

decline of prices took place in the

last two months of the said year .

The average price of Arabian

light crude reached $ 97.18 per

barrel, compared with about

$ 106.53 per barrel in 2013.

FIRST: Oil PricesThe year 2014 witnessed the beginning of the decline of oil prices. The largest

decline of prices took place in the last two months of a foresaid. According to

OPEC data, all world oil prices declined during 2014. The average price of Arabian

light crude reached $ 97.18 per barrel, with a decrease ratio of 8.78% compared

with about $ 106.53 per barrel in 2013. The average price of North sea oil (Brent)

decreased by 8.78% to reach $ 99.08 per barrel compared with about $ 108.62 in

2013. The average price of Dubai oil reached $ 96.71 per barrel during 2014, by a

decline ratio of 8.29% compared with about $ 105.45 in 2013, (table 20).

Table :(21) Oil Prices

Opec Reference Basket 105.87 96.29 -9.05%

Arab Light 106.53 97.18 -8.78%

Basrah Light 103.6 94.45 -8.83%

Bonny Light 111.36 100.85 -9.44%

Es Sider 108.51 98.51 -9.22%Girassol 109.14 99.19 -9.12%

Iran Heavy 105.73 96.18 -9.03%

Kuwait Export 105.04 95.32 -9.25%

Qatar Marine crude 105.52 96.39 -8.65%

Merey 96.66 86.88 -10.12%

Murban 108.21 99.45 -8.10%

Oriente 97.74 87.31 -10.67%

Saharan Blend 109.38 99.68 -8.87%

Other Crudes

Brent 108.62 99.08 -8.78%

Dubai 105.45 96.71 -8.29%

Isthmus 105.16 93.65 -10.95%

LLS 107.33 96.92 -9.70%

Mars 102.24 92.93 -9.11%

Minas 107.41 98.68 -8.13%

Urals 108 98.08 -9.19%

WTI 97.96 93.26 -4.80%Source:OPEC , Oil market report Jan 2015.

$/ barrel

Types of oil 20142013Annual

Change %




The month of January witnessed

the lowest level of oil prices,

then prices started to improve in

February and March.

Follow up of oil prices in the first quarter of 2015 shows that the month of

January witnessed the lowest level of oil prices. The price of Arabian light oil

barrel reached $ 44.47 then prices started to improve in February of the same

year to reach $ 53.78. The price of Brent crude increased to $ 60 per barrel

during March while the price of the Arabian light crude reached $ 52.2 per

barrel in March, (figure 23).

Figure (23) : Oil Prices

Source: Prepared by SECOR, based on OPEC data, oil markets report (2015).




The average world production of

oil during 2014 increased by

2.39% compared with the

previous year.

SECOND: World Oil ProductionOPEC data indicate that the average world production of oil during 2014

reached about 92.22 million barrels/day, by an increase of 2.39% compared with

about 90.07 million barrels/day in 2013. The growth of supply exceeded the

growth rate of world demand for oil. This increase is attributed to the increased

average total production supply from non-OPEC countries by 3.85% to reach

56.35 million barrels per day in 2014 compared with about 54.26 million in 2013.

Table :(2) Average World Oil Production

Algeria 1.16 1.15 -0.86%Angola 1.74 1.66 -4.60%Ecuador 0.52 0.54 3.85%

Iran 2.67 2.77 3.75%Iraq 3.04 3.27 7.57%

Kuwait 2.82 2.77 -1.77%Libya 0.93 0.47 -49.46%

Nigeria 1.91 1.91 0.00%Qatar 0.73 0.72 -1.37%

Saudi Arabia 9.59 9.68 0.94%United Arab Emirates 2.74 2.76 0.73%Venezuela 2.36 2.37 0.42%Total Opec 30.21 30.07 -0.46%Americas 18.16 19.86 9.36%Europe 3.58 3.59 0.28%

Asia Pacific 0.49 0.52 6.12% Total OECD 22.23 23.97 7.83%Other Asian 3.61 3.56 -1.39%Latin america 4.78 5.03 5.23%Middle East 1.36 1.34 -1.47%

Africa 2.4 2.42 0.83% Total DCs 12.15 12.35 1.65%

FSU 13.41 13.43 0.15%Other Europe 0.14 0.14 0.00%

China 4.24 4.26 0.47%Total Other regions 17.78 17.83 0.28%

Processing gains 2.1 2.2 4.76% Total Non-Opec supply 54.26 56.35 3.85%

Opec natural gas supplies 5.6 5.8 3.57%World Supply 90.07 92.22 2.39%

Source:OPEC , O il market report Jan 2015.

Million barrel/ day

2013 2014CountriesAnnual Change

%




The US rock oil constituted themajor portion of oil production

increase.

In particular, the average production of OECD countries increased by 7.83%

from 22.23 million barrels per day in 2013 to 23.97 million in 2014. The bulk of

growth took place in the production of America countries. The US rock oil

constituted the major portion of this increase which reached 9.36% raising from

18.16 million barrels/day in 2013 to 19.86 million in 2014. As for non-OPEC

countries, the average production of Soviet Union (previously) during 2014

increased only by 0.15% to reach 13.43 million barrels/day in 2014. During the

first quarter of 2015, the average world oil production increased by 1.6%.

Figure (24) : World Oil Production





There is also an increase in the

production of OPEC countries in

2014, Iraq production in 2014

also increased by 7.5% than

2013.

Despite the saturation of the market, there is also an increase in the production of

OPEC countries. There is a direction in some OPEC member states such as Saudi

Arabia, UAE and Kuwait not to reduce production. The Kingdom's decision not to

reduce production indicates its priority to increase its market share and maintain it.

Therefore, the Kingdom's production in 2014 increased by 0.8% than the previous

year. Iraq production in 2014 also increased by 7.5% than 2013, representing 225

thousand barrels/day. Libya oil supplies shrank in 2014 by 49.5%, lower than the

previews year by 454 thousand B/d Despite the sanctions imposed on Iran exports,

its production increased in 2014 by 3.75% or by about 71 thousand barrels/day.

Figure (25) : Growth of Oil Production in Selected Countries from OPEC and USA





The average world demand on

oil during 2014 increased to

reach 91.2 million barrels/day

compared with about 90,2

mbpd in 2013.

This increase was mainly

supported by non-OECD

countries.

THIRD: World Demand for Oil

According to OPEC estimations, the average world demand on oil during 2014increased by 1.06% to reach 91,2 million barrels/day compared with about 90,2

mbpd in 2013. This increase was mainly supported by non-OECD countries.

China's average demand increased by 3.87% to reach 10.46 million barrels/day

compared with about 10.07 mbpd in 2013. It is well known that Chinese

government's long term energy security strategy is based on purchasing crude

oil stocks at times when prices drop. Thus, the increase of demand for oil is

attributed to China's efforts aimed at boosting these stocks. China enjoys crude

oil stocks sufficient for 30-day consumption .

China aims at ensuring that its stocks cover 100-day consumption by 2020.

With the drop of prices, china resorts to increase its purchases of crude oil to

build strategic stock.

Table :(22) World Oil Demand

Total OECD 46.06 45.78 -0.61%

American countries 24.09 24.19 0.42%

Europe 13.64 13.45 -1.39%

Oceania 8.33 8.14 -2.28%

Total DCs 29 29.76 2.62%

Other Asia 11.06 11.27 1.90%

Latin America 6.5 6.69 2.92%

Middle East 7.81 8.06 3.20%Africa 3.63 3.74 3.03%

Total Other regions 15.18 15.66 3.16%

FSU 4.48 4.54 1.34%

Other Europe 0.63 0.66 4.76%

China 10.07 10.46 3.87%

Total World Demand 90.24 91.2 1.06%

Source:OPEC , Oil market report Jan 2015.

Countries 2013 2014

Million barrel/ day

Annual

Change %




Average demand increased in

Middle East countries, Latin

American countries, African

countries, whereas it declined

in European and Pacific Ocean

countries.

Average demand increased in Middle East countries by 3.20% to reach 8.06

million barrels/day compared with about 7.81 mbpd in 2013, in Latin American

countries by 2.92% to reach 6.69 million barrels/day compared with about 6.5

mbpd in 2013 and in African countries by 3.03% to reach 3.74 million

barrels/day compared with about 3,63 mbpd in 2013. Average demand declined

in European and pacific ocean countries due to weak economic growth. The

average world demand for oil increased during the first quarter of 2015 by 0.1%

to reach 91,4 million barrels/day compared with about 91,3 mbpd in the first

quarter of 2014.

Figure (26) : World Oil Demand





The Kingdom's crude oil

production increased from

3517.6 million barrels in 2013

to 3545.1 million barrels in

2014.

FOURTH: Kingdom's Oil Production and ConsumptionThe Kingdom's crude oil production increased by 27,5 million barrels from

3517.6 million barrels in 2013 to 3545.1 million barrels in 2014. The Kingdom's

production peaked in June 2014 to reach 10,005 million barrels/day under the

increased world demand for oil and the increase of prices to about $ 120 per

barrel. However, the decline of world demand and drop of prices in November

lead to the decrease of the Kingdom's production to 9,610 million barrels/day.

Figure (27) : Local Consumption of Oil

Source: Prepared by SECOR based on Ministry of Petroleum and Mineral Resources data.




Total domestic consumption of

refined products, crude oil in

the Kingdom by 6.5%.

Total domestic consumption of refined products, crude oil and natural gas

increased during 2014 to reach 1516.82 million barrels compared with about

1423.8 million in 2013, (table 23). This increase in domestic consumption is

attributed to the increase of overall consumption by 5.4% and the consumption of

oil industry sector by 17.4%.

Demand for oil in the Kingdom comprises the needs of refineries and direct

combustion for electricity generation. The increase in demand for oil is basically

attributed to the operation of SATORP refinery in Jubail industrial city, the refining

capacity of which reached 0.4 million barrels/day in the last quarter of 2013, thus

leading to the increased consumption of refineries since the beginning of the year.

Table :(23) Local consumption of Refined Products, Crude Oil and Natural Gas

(Million barrels)

A. General consumption

Liquefied petroleum gas 12.27 11.48 -6.4

Premium gasoline 184.14 190.71 3.6

Jet fuel and Kerosene 25.56 27.28 6.7

Diesel 259.40 261.22 0.7

Fuel oil 107.47 125.86 17.1

Crude oil 176.94 202.36 14.4

Asphalt 20.94 28.59 36.5

Lubricating oil 1.59 1.92 21.1

Crude oil 496.44 504.09 1.5

Sub-total 1284.72 1353.51 5.4

B. Oil industry consumption

Liquefied petroleum gas 2.99 3.71 24.0

Fuel oil 4.84 13.72 183.3

Diesel 6.92 12.67 83.0

Fuel gas 20.29 20.56 1.3

Crude oil 0.07 0.1 42.9

Crude oil 100.8 110.54 9.7

Others 3.15 2.01 -36.2

Sub-total 139.07 163.31 17.4

Grand Total 1423.8 1516.82 6.5

Source: Ministry of Petroleum an d Mineral Resources.

Product 2013 2014Annual

Change %




6

PUBLIC FINANCE




The Kingdom's budget of 2014

recorded a deficit with a value of

SR 54 billion.

FIRST : Public FinancePreliminary data of the MOF show that actual data of 2014 budget was

significantly different from the estimated data which expected a balanced budget

where revenues are equal to expenditure at the level of SR 855 billion. Below are

the main features of the budget:

The Kingdom's budget of 2014 recorded a deficit, for the first time, in 2009 with a

value of SR 54 billion (USD 14.4 billion), or 1.9% of the GDP. Although the actual

revenues exceeded the estimated revenues by 22.3%, yet the actual expenditure

exceeded the estimated expenditure by a larger rate (28.7%). These expenditure

constituted about 39% of the GDP, leading to a deficit in the budget.

Figure (28) : Budget Performance

Source: Prepared by SECOR, based on Finance Ministry data, Ministry`s of finance statement about the national budget for the year 1436/1437 H

.6 Public Finance




Government spending in the estimated

budget of 2015 continued to grow

despite fluctuations of the oil markets.

Government spending in the estimated budget of 2015 continued to grow

despite fluctuations of the oil markets which led to decrease of prices. This

confirms continuity of the Kingdom in supporting the development projects

which enhance sustainability of development and growth. Estimated

expenditure amounted to SR 860 billion compared to 855 billion in the previous

year, or only 0.6% up. It is noteworthy that the 2015 budget is the largest ever

in the Kingdom. This increase in spending is attributed to increase in current

spending by 2.8%. However, capital spending decreased by 3.8% compared to

estimated expenditure in the 2014 budget. On the other hand, public revenues

were estimated at about SR 715 billion, of which oil revenues account for 84%,

and with an decrease of 16.4% compared to the estimated revenues in 2014

budget, (table 24).

Table :(24) Public Finance by Sectors

(Million Riyals)

2015

Projections Actuals %Change Projections Actuals %Change Projections

Total revenues 829,000 1,156,361 39.49% 855,000 1,046,000 22.34% 715,000

Oil revenues 727,000 1,035,046 42.37% 735,000 931,000 26.67% 581,300

Other revenues 102,000 121,315 18.94% 120,000 115,000 -4.17% 133,700

Total Expenditures 820,000 976,014 19.03% 855,000 1,100,000 28.65% 860,000

Current expenditures 537,759 664,047 23.48% 566,716 748,000 31.99% 582,720

Capital expenditures 282,241 311,967 10.53% 288,284 352,000 22.10% 277,280

Surplus/deficit 9,000 180,347 _ 0 -54000 _ -145,000

Source: Ministry of Finance , Ministry's of Finance statment about the national budget for 2015

2013 2014Items




The actual revenues amounted

to SR 1046 billion in 2014, or

22.3% up from the estimated

revenues in the budget.

SECOND: Public Revenues for 2014

Preliminary data of the MOF show that actual revenues amounted to SR 1046

billion in 2014, or 22.3% up from the estimated revenues in the budget.

However, they are about SR 110 billion (or 9.5%) less than the actual revenues

of 2013 which are the least revenues since 2010. The reason behind decrease of

actual revenues was the decline of oil revenues by 10% which is attributed to

decline of oil prices by 8.8% despite increase of oil production by 1% to an

average of 9.7 mbpd in 2014. Actual oil revenues decreased by 10%, compared

to the previous year, to about SR 931 billion, or 89% of total revenues. On the

other hand, non-oil revenues decreased by 5.2%, compared to the previous year,to almost SR 115 billion. Despite the slight increase in the percent distribution

of other non-oil revenues to account for 11% of total public revenues, which is

the highest since 2011, yet the Kingdom is still dependent, to a great extent, on

oil revenues. This makes it susceptible to fluctuations of world demand for oil.

Figure (29) : Public Revenues

Source: Prepared by SECOR, based on Finance Ministry data, Ministry`s of finance statement about the national budget for the year 1436/1437 H




Actual expenditure amounted

to SR 1100 billion in 2014, with

an increase of SR 124 billion,

compared to actual

expenditure in 2013.

THIRD: Public Expenditure for 2014

Actual expenditure amounted to SR 1100 billion in 2014, with an increase of SR 124

billion, or by a growth of 12.7%, compared to actual expenditure in 2013 and 28.7%

up compared to the estimated expenditure in the budget. This volume of increase

in actual expenditure relative to estimated expenditure is the largest since 2011

and is attributed to increase of spending on implementation of King Abdullah

Project of Expansion of the Two Holy Mosques and related compensations for

property expropriation as well as increase of spending on other development and

services projects and the assistance provided to other countries.

Capital expenditure increased by 12.8% from the level of the previous year. Capitalspending is important for support of non-oil sector growth thereby reducing

reliance on oil sector as a main source of income. Although capital expenditure, as

a percent of public expenditure, increased over a period of ten years from 13.2% in

2004 to 32% in 2014, yet current expenditure still account for the largest share

almost 68% of total expenditure.

Figure (31) : Public Expenditure

Source: Prepared by SECOR, based on Finance Ministry data, national budget for the year 1436/1437 H




The increase included all

spending items in the budget of

2014, except for items of public

administration and public

facilities and subsidies

Allocations assigned for human

resource increased by 3% , and

transport and communications

sector increased by 6.5%.

Main items of Spending on Key Sectors in the Budget:

Financial allocations of human resources development sector amounted to SR

209 billion in 2014, or 3% up compared to the amounts allocated to the sector

in 2013 and accounted for 24.5% of total expenditure approved by the budget.

These amounts were allocated mainly for development of the education

process, provision of related appropriate environment by increasing the

absorptive capacity of universities, construction of new school buildings and

rehabilitation of the existing ones and providing them with security and safety

devices, adoption of e-education, implementation of King Abdullah Project for

Development of Public Education as well as allocations assigned for King

Abdullah External Scholarship Program.

Allocations assigned for transport and communications sector amounted to

SR 23.5 billion in 2014, or 6.5% up compared to allocations made in 2013

budget. These allocations are mainly directed for implementation of intra-city

public transport projects and programs; approved projects of roads, seaports,

railroads, airports and postal services; and projects of studying and designing

main and secondary roads. Such allocations assigned to transport projects

represent a vital step in light of the dire need for provision of public transportmeans, particularly for working women.

Table :(25) Distribution of Budget Allocations for the Fiscal Year 1435/1436H (2014) by Sectors

(Million Riyals)

AmountAnnual

Change%% Share Amount

Annual

Change%% Share

human Resource Development 203,147 20.94% 24.8% 209,296 3.03% 24.5%

Transport & Communications 22,063 7.28% 2.7% 23,506 6.54% 2.7%

Economic Resource Development 46,696 13.47% 5.7% 49,537 6.08% 5.8%Health Service & Social Development 70,938 15.75% 8.7% 78,166 10.19% 9.1%

Infrastructure Development 11,702 11.18% 1.4% 13,540 15.71% 1.6%

Municipal Services 31,729 24.62% 3.9% 34,610 9.08% 4.0%

Defense & National Security 251,325 18.62% 30.6% 302,859 20.50% 35.42%

Public Administration, Public Utilities & General Items119,948 11.53% 14.6% 84,558 -29.50% 9.89%

Government Specialized Credit Institutions 14,950 38.62% 1.8% 15,375 2.84% 1.80%

Subsidies 47,502 44.65% 5.8% 43,553 -8.31% 5.09%

Total 820,000 18.84% 100.0% 855,000 4.27% 100.0%

Items2013 2014

Source: Ministry of Finance , Ministry of Finance statment about the national budget for 2015




In the budget of 2014 the

allocations assigned for

economic resources sector

increased by 6.1%, and the

allocations assigned for health

and social development,

infrastructure and

municipalities services sectors

rose by 10.2%, 15.7%, and 9.1%

respectively

Allocations of the national

security and defense sector and

the Specialized Government

Credit Institutions rose in 2014

budget by 20.5% and 2.8%

respectively .whereas

allocations of public

administration, public facilities

and general items deceased by

29.5% in 2014 .

Transport is one of the key obstacles which limit employment of women in the

shortage of public transport means and high cost of private transport means.

Allocations assigned for economic resources development sector amounted to

SR 49.5 billion in 2014, or 6.1% up compared to allocations made in 2013

budget, and account for 5.8% of the total expenditure approved in the budget.

These allocations are directed mainly for implementation of the new projects

and expansion of the existing ones; provision of drinking water; enhancement

of water sources; development of sanitation services; construction of dams;

drilling of wells; detection of water leakages; as well as establishment of new

desalination plants, including those working by solar energy, and development

of the existing ones . Allocations assigned for health and social development sector amounted to

SR 78 billion in 2014, or 10.2% more than the allocations made in 2013 budget

and account for 9.1% of total expenditure approved in the budget. They were

directed for construction of new hospitals and reference laboratories for blood

banks, medical centers and polyclinics, as well as social development projects

including sport clubs and rehabilitation centers .

With respect to infrastructure development sector, 2014 budget allocations

amounted to SR 13.5 billion, or 15.7% up compared to 2013 budget allocations

and accounts for 1.6% of the total expenditure approved in the budget.

Regarding municipal services sector, 2014 budget allocations stood at SR 35

billion, or 9.1% up from 2013 budget allocations, and accounted for 4% of the

total allocations approved in the budget. These allocations did not include the

expenditure funded from the direct revenues of the municipalities with an

amount of about SR 4.4 billion, and were directed for implementation of rain

water drainage projects; prevention of torrential rain risks; protection of the

vallies; provision of equipment and machinery for construction of tunnels and

bridges in some roads and streets inside cities; and development of the existing

ones to facilitate traffic flow and limit pertinent congestions.

National security and defense sector received about SR 302 billion in 2014

budget, or 20.5% up compared to 2013 budget allocations and accounted for

35.3% of the total expenditure approved in the budget. Most of this increase

comes from reclassification of some amounts allocated to this sector with the




The priorities of this spending

were consistent with the

priorities of the budgets of the

previous years.

amounts allocated to the category of public administration, public facilities

and general items with a value of SR 84 billion in 2014 which is 29.5% less

compared to the amount allocated in 2013 budget and accounted for 9.9% of

total expenditure approved in the budget .

Finally, the 2014 budget allocated about SR 15.4 billion for the Specialized

Government Credit Institutions, or 2.8% more than the amount allocated in

2013 budget and accounted for 1.8% of the total expenditure approved in the

budget. This amount is mainly assigned for provision of easy-term credit for

support of industrial, agricultural and real estate sectors.

Although spending in 2014 budget included all sectors, yet the priorities of this

spending were consistent with the priorities of the budgets of the previous

years. National security and defense sector received the largest share of

allocations with expenditure of about 35.3% of the total expenditure. Human

resources development sector came next with a share of 24.5% of total

expenditure .

Regarding the growth rate of allocations, the national security and defense

sector came first with an increase of 20.5% compared to allocations of the

previous year (mainly as a result of reclassification), followed by infrastructuresector 15.7%.

Figure (3) : Distribution of Budget Allocations of the Year 1435/1436 (2014) by Key Sectors

Source: Prepared by SECOR, based on Finance Ministry data, the national budget for the year 1436/1437 H




The public debt declined by

26.4% reaching SR 44,3 billion

by the end of 2014.

FOURTH: Public Debt

Despite the budget deficit, the public debt continued to decline reachingSR 44,3 billion by the end of 2014 compared to SR 60,1 billion by the end of 2013,

or 26.4% down and equivalent to 1.6% of the GDP. Accordingly, the Kingdom is

considered the country with the least ratio of debt as a percent of GDP.

In 2002, the Kingdom recorded the highest public debt in its history with a

value of SR 685,2 billion, or 96.9% of the GDP. However, the government

prepared a plan for amortization of debt and succeeded in repayment of about

SR 640,9 billion since 2002.

Table :(26) Public Debt as a Percent of GDP

Figure (32) : Public Debt

Source: Prepared by SECOR, based on Finance Ministry data, Ministry of finance statement about the national budget for the year 1436/1437 H

2013 2014 Change %

(2013-2014)

GDP at current prices 2,791,259 2,821,722 1.09%

Public debt 60,118 44,260 -26.38%

Ratios of public debt to GDP 2.15% 1.57% _

(Million Riyals)

Source: Ministry of Finance , Ministry of Finance statment about the national budget for 2015




7

RANKING OF THE KINGDOM

IN INTERNATIONAL INDICES




The kingdom ranked 24th in the

global competitiveness index in

2014.

The higher education and

training index recorded the

highest decline in the sub-

indices of competitiveness.

The Kingdom still faces some

challenges in terms of improving

its ranking in some other sub-

indices.

FIRST: Global Competitiveness Index

The global competitiveness report for 2014 issued by the World Economic Forum,

indicates that the Kingdom's ranking in the global competitiveness index has

declined by four ranks to reach the 24th rank out of 144 classified countries

compared with 20th rank in 2013. The global competitiveness index adopts three

main indices comprising a number of sub-indices (shaded text No. 3). The decline of

the Kingdom's ranking covered the three main indices which constitute the overall

index: Basic Requirements Index where the Kingdom occupied the 15th rank, theEfficiency Enablers Index where the Kingdom ranked 33rd and the Innovation and

Development Index where the Kingdom ranked 32nd at the global level.

Concerning the positive aspects accomplished by the Kingdom, the macroeconomic

environment quality index remained at the 4th rank internationally through

achievement of positive outcomes in related indices. The Kingdom ranked 2nd at the

global level in the decrease of public debt ratio to GDP and ranked 6th in the index

of the ratio of public debt to GDP. The Kingdom still faces some challenges in terms

of improving its ranking in some other indices such as: index of the ratio of women

participation in labor market compared to males where the Kingdom ranked 141th

and the index of imports as percent of GDP where the Kingdom ranked 120th.

Figure (33) : Ranking of Countries According to Global Competitiveness indices in 2014/2015

Source: Prepared by SECOR, based on the World Economic Forum data, global competitiveness Report 2014/2015

7 . Ranking of the Kingdom international Indices




Table (27) : Kingdom`s Performance according to Global Competitiveness Indices

Sub-indicatorsRanking for

2014-2013

Ranking for

2015-2014Change

Basic requirements 14 15 -1

Institutions 20 25 -5

Infrastructure 31 30 1

Macroeconomic environment 4 4 0

Health and primary education 53 50 3

Efficiency enhancers 27 33 -6

Higher education and training 48 57 -9

Goods market efficiency 27 35 -8

Labor market efficiency 70 64 6

Financial market development 27 30 -3

Technological readiness 41 45 -4

Market size 23 20 3

Innovation and sophistication factors 29 32 -3

Business sophistication 28 30 -2

Innovation 30 33 -3

Source: World Economic Forum, The Global Competitiveness Report of the year 2014/2015

2013-2014 rating - out of 148 countries.

2014 -2015rating - out of 144 countries.




The Kingdom ranked 47thinternationally according to the

world welfare index for 2014.

The Kingdom jumped by 22

ranks in the international

innovation index of education

pillars in 2014.

SECOND: World Prosperity IndexThe Kingdom ranked 47th internationally according to the world Prosperity

index for 2014 issued by the British Legatam Institute. The index which

comprises 142 countries indicated that the Kingdom has advanced by three

ranks than its 50th rank in 2013. This index is based on eighth criteria to

determine the welfare enjoyed by a country which are: economy,

entrepreneurship initiatives, opportunities, governance, education, health,

safety and security, personal freedom, and social capital. The Kingdom has

enhanced innovation through devotion of attention to human capital which is

the basic and important pillar for all innovated changes. The Kingdom hasdeveloped human capital at various fronts including: devotion of attention to

education for which the country allocated 25% of the total allocations of the

state budget in addition to the reform of the education system. The Kingdom

facilitates expansion of higher education institutions through establishment of

international standard universities locally. Thanks to all these efforts, the

Kingdom advanced in the international innovation index of education pillars

from the 50th rank in 2013 to the 28th rank in 2014.

Table (28) : Ranking of Countries According to the Prosperity Legatum Index in 2014

Countries Rank

ECONOMY

ENTREPRENEURSHIPand

OPPORTUNITY

GOVERNANCE

EDUCATION

HEALTH

SAFETY& SECURITY

PERSONALFREEDOM

SOCIALCAPITAL

Norway 1 3 7 7 5 5 6 2 1Switzerland 2 1 3 1 21 3 11 12 9

New Zealand 3 15 18 2 7 20 10 1 2

United States 10 17 11 12 11 1 31 21 7

United Kingdom 13 28 8 10 20 19 21 10 12

Emirates 28 10 31 32 39 37 26 55 43

Kuwait 36 16 35 44 30 40 34 83 62

Saudi Arabia 47 24 49 49 28 45 72 136 23

Source: Legatum Institute, Th e 2014 Legatum Prosperity Index




The Kingdom ranked 68th

internationally according to the

energy sustainability index for

2014.

THIRD : Energy Sustainability Index The Kingdom ranked 68th internationally out of 129 countries according to the

energy sustainability index for 2014 issued by the World Energy Council. The

index indicated that the Kingdom has declined by 17 ranks than its rank in

2013. This index classifies the various countries in terms of ability to provide a

safe and stable energy system and shouldering its costs along with

conservation of environment.

The Kingdom ranked the 68th in terms of safe energy, 7th in the currency value

of energy and its ability to shoulder its costs and the 125th in terms of

environment sustainability and pollution impact.

Table :(29) Ranking of Countries According to the Energy Sustainability Index

Countries

SwitzerlandSwedenNorway

United KingdomUnited States

QatarEmiratesBahrain

Saudi ArabiaOmanKuwait

Source: World Energy Council, sustainable energy index 2014.

13

7

5

15

51

62

66

Change

0

76

44

38

3

-2

9

-9

-17

1812

20

35

47

-10

-10

1

4

1

1

2

3

4

68

72

Ranking for 2013 Ranking for 2014




The Kingdom ranked the 49th

according to the Doing Business

Index in 2015.

FOURTH: Doing Business Index

The Kingdom's ranking declined by five ranks in 2015 to occupy the 49th rankat the international level among 189 countries covered by the report compared

with 44th in 2014 according the business doing report issued by the

International Finance Corporation affiliating the World Bank Group. The report

covers evaluation of the competitiveness of investment environment and

performance of each economy compared with other economies. The existence

of a flexible and sound business environment represents the engine of

economic growth. Therefore, decision makers exert utmost efforts to

formulate policies that encourage business entrepreneurship in domestic

markets in addition to attraction of investments, a matter which contributes in

supporting economic diversification and innovation rates.

Table :(31) Kingdom's Ranking in sub-indices of Doing Business Index

Sub-indices

Starting a Business

Dealing with Construction Permits

Getting Electricity

Registering Property

Getting Credit

Protecting Minority Investors

Paying Taxes

Trading Across Borders

Enforcing Contracts

Resolving Insolvency

Source: World Bank, Doing Business Report 2015.

Doing Business

2015

109

Doing Business

2014

21

23

19

67

61

3

84

108

-11

0

-8

163

1

-1

-4

-1

0

Change

22

20

71

62

3

92

108

98

21

0

0163




The Kingdom ranked 3rd

internationally regarding

payment of taxes during 2015.

According to the report, starting any project in the Kingdom encompasses nine

procedures and takes 20.5 working days in addition to a cost that reaches 4%

of per capita income. Therefore, the Kingdom's ranking in terms of easy start of

project stands at 109th out of 189 countries compared with 98th in the previous

year. Furthermore, the Kingdom's ranking declined in the border trade index

by eight ranks due to the disturbances on the northern and southern borders.

In terms of positive aspects, the Kingdom ranked 3rd internationally regarding

payment of taxes as well as its classification within the best tax systems

regarding stimulation of investments.

Figure (34) : Ranking of Countries According to Doing Business Index (2015)

Source: Prepared by SECOR, based on World Bank data, Doing Business report 2015.




The future perspective of

Kingdom's sovereign rating

declined from positive to

stable.


internationally according to

the knowledge economy index

for 2012.

FIFTH: Future Perspectives of Sovereign

The International Standard and Poors Agency for credit rating for 2014 reduced thefuture perspective of Kingdom's sovereign rating from positive to stable at a credit

degree of (AA). This means that the Kingdom's economy will continue with

achievement of the same robust performance in the future due to the large

reserves it formed over the past years. However, the Saudi economy still needs

more diversification of its revenues for protection against any fluctuations in oil

prices in future.

SIXTH: Knowledge Economy IndexThe Kingdom ranked 50th internationally out of 145 countries according to the

knowledge economy index for 2012 issued by the World Bank. This index is based

on four criteria including: economic incentives, education, innovation and CIT.

This index ranks countries according to their ability to generate and transform

knowledge into scientific creativity and commercial innovations which ensure the

country's leadership in the various fields in addition to the provision of job

opportunities to national cadres. The Kingdom devotes utmost attention to the

move toward knowledge-based economy to support and upgrade sustainability ofeconomic growth indicators.

Figure (35) : Ranking of Countries According to Knowledge Economy Index for 2012

Source: Prepared by SECOR, based on World Bank data, knowledge-based economy Report 2012.





according to the global

innovation index .It advanced by

four ranks in 2014.

SEVENTH: Global Innovation Index

During 2014, the Kingdom realized a tangible progress in the global

innovation index issued by Cornell University, INSEAD University and the

World Intellectual Property Organization. The Kingdom ranked 38th out of

143 countries. It advanced by four ranks compared with its ranking in 2013.

This reflects the priority the Kingdom devotes to the transition to knowledge

economy as well as its understanding of the important role of innovation as an

engine of economic growth and prosperity, particularly in light of the plans

related with development of non-oil sectors aimed at ensuring economic

diversification, enhancement of competitiveness and integration in the world

economy.

This index ranks countries according to their innovative capacities and the

realized outcomes. The global innovation index is computed by defining an

average of two sub-indices which are: (1) the sub-index of innovation inputs

which is based on five pillars: institutions, human capital, research,

infrastructure and development of markets and business, and (2) sub-index of

innovation outputs comprising outputs of knowledge, technology andinnovation.

The positive aspect of this report is that the Kingdom ranked third

internationally in the index of ease of payment of taxes emanating from the

institutions index and ranked 5th internationally in non-material innovation

outputs index.




Despite the progress made by the Kingdom in the overall innovation index, it

still needs to improve its positions in some sub-indices such as: Press freedom

index emanating from the institutions index and the index of the ratio of

exports of CTI services to total trade emanating from the index of knowledge

and technology outputs where the Kingdom ranked 135th and 132nd

respectively.

Table :(3) Kingdom's Ranking According to Global Innovation Index

Countries

Switzerland

United Kingdom

Sweden

United States

Emirates

Saudi Arabia

Qatar

Bahrain

Kuwait

Oman

1

2

80

3

6

36

38

47

38

42

69

75

43

67 62

50

2

4

Ranking for 2013

1

3

2

5

Change

0

1

-1

-1

Ranking for2014

Source: Cornell U niversity , (INSEAD) University and the World Intellectual Property Organization (wipo), Global

Innovation Index 2014 report.

5

-4

5

-19





internationally in the e-

government transactions index in

2014.

EIGHTH: E-Government Transaction Index

The Kingdom realized a tangible progress in the e-government transactionsindex which is prepared every two years to monitor and evaluate government

procedures. The Kingdom ranked 36th out of 193 countries covered by the UN

report on e-government transactions for 2014 compared to 41th and 58th in

2012 and 2010 respectively.

This progress reflects the efforts exerted regarding the move towards a

knowledge and information based society and making use of technology in the

provision of government services. It also reflects the significant expenditure

allocated for development of communication infrastructure, particularly e-

government portals. The report commended the national e-government

transactions portal (Saudi) which ensures access to e-government services in

the Kingdom and completion of transactions rapidly and efficiently.

Table :(32) Kingdom's Ranking According to E-Government Transactions Index

Countries

Republic of Korea

Australia

Singapore

United States

United Kingdom

Bahrain

Emirates

Saudi Arabia

Qatar

Oman

Kuwait

Source: United Nations, the United Nations report for E-Government in 2014

Ranking for

2012

1

2

4

16

14

Ranking for

2014

44

48

49

-2

-4

18

-4

5

3

7

8

18

32

36

Change

0

10

7

63

48

64

1

12

10

5

4

36

28

41





according to the E-government

services delivery indicator, 71st

according to human resources

indicator and 52nd according to

TII indicator.

The e-government index depends on three key indicators which comprise a

number of sub-indicators as shown below :

E-Government Services Delivery Indicator (OSI) which assesses the level of

services and information available on government web sites. It comprises four

sub-indicators: Emerging Information Services, Advanced Information Services,

Transactions Services, Related Services.

Human Resources Indicator (HCI) which reflects the extent of ability of the

people of a country to use ICT. It comprises four sub-indicators: Education

among those in the age of 15 years and above (adults), Gross Enrollment Rate,

Expected Years in Education, Average years of schooling.

Telecommunications Infrastructure Indicator (TII) which assesses ICTinfrastructure. It comprises five sub-indicators: Individuals using internet,

Mobile phone users, Fixed telephone users, Broadband subscribers (wireless),

Broadband subscribers (wire/fixed).

The Kingdom ranked the 18th according to the E-government services delivery

indicator, which represents one of the key indicators which compose the overall

index, compared to 19th in 2012. It also ranked the 71st according to human

resources indicator and 52nd according to TII indicator.

Table (:(33 Overall Assessment of EGDI (2014)

Countries RankingE-Government

Development Index

Online Service

Index

Human Capital

Index

Telecommunication

Infrastructure Index

South Korea 1 0.9462 0.9764 0.9273 0.9350

Australia 2 0.9103 0.9291 0.9978 0.8041

Singapore 3 0.9076 0.9921 0.8515 0.8793

France 4 0.8938 1.00 0.8812 0.8003

Netherlands 5 0.8897 0.9291 0.9224 0.8175

Japan 6 0.8874 0.9449 0.8621 0.8553

United States 7 0.8748 0.9449 0.9390 0.7406Britain 8 0.8695 0.8976 0.8574 0.8534

Bahrain 18 0.8089 0.9370 0.7840 0.7055

Emirates 32 0.7136 0.8819 0.6657 0.5932Saudi Arabia 36 0.6900 0.7717 0.7461 0.5523

Qatar 44 0.6362 0.6535 0.6671 0.5879

Oman 48 0.6273 0.7323 0.6624 0.4873

Kuwait 49 0.6268 0.5748 0.7194 0.5862

Scale ranges between zero and one, where zero is the worst performance m easure, an d the one is the best level of performance.

Source: United Nations, the United Nations Report for E-Governmen t in 2014




Shaded text No. 3: Components of Global Competitiveness Index

1. Basic Requirements: Institutions: Reflects the institutional structure in which individuals, firms and government agencies work and is considered as a key tool

for development. It comprises 21 sub-indicators including: waste in government spending, property rights, confidence in politicians,

effectiveness of legal frame in settlement of disputes, effectiveness of corporate boards of directors, judiciary independence.

Infrastructure: It measures available infrastructure which provide easy linkage and balanced development among all provinces. It

comprises 9 sub-indicators, including quality of infrastructure, roads, railways, seaports, air transport, number of subscribers in mobile

phone and fixed telephone, and quality of sources of electricity power .

Macro Economy Structure: It reflects the extent of stability of macro economy and its role in achieving a sustainable growth and enhancing

the development process. It comprises 5 sub-indicators, including: Public Debt as a percent of GDP, Rate of inflation, National Saving as a

percent of GDP, State budget as a percent of GDP, Creditworthiness of the Country.

Health and Primary Education: It reflects the degree of investment in primary education and health services. It comprises 10 sub-

indicators: Quality and Rate of Enrollment of Elementary Education, Life Expectancy at Birth, Infant Mortality Rate at Birth, Incidence of

AIDS and TB Prevalence, Impacts of AIDS, TB and Malaria on Business.

.2 Efficiency Enablers:

Higher Education and Training: It measures the quality of higher education and training and their role in enhancing the competitiveness

of the economy to be capable of entering into the fields of creative production and R&D. It is composed of 8 sub-indicators, including:

Quality of the Education System, Quality of Mathematics and Science Education, Availability of Research and Training Services, Gross

Rate of Enrollment in Tertiary and Secondary Education, Quality of Schools and Colleges Management .

Efficiency of Merchandise Market: It measures ability of the economy to export highly-demanded, highly-specialized goods. It comprises

16 sub-indicators: Severity of Domestic Competition, Degree of Market Control, Efficiency of Monopoly Combating, Taxes as a Percent of

Profits, Imports as a Percent of GDP.

Efficiency of Labor Market: It measures the efficiency and flexibility of labor market. It comprises 10 sub-indicators: Flexibility in

Determining Wages, Level of Wages and Productivity, Ability of the Country to Attract and Retain Talents, Rate of Female Participation in

Labor force compared to the Rate of Males, Type of Relationship between the Employee and the Employer, Degree of Strictness of Labor

Laws.

Development of Capital Market: it reflects the ability of the financial sector to encourage investment and provide financial services. It

comprises of sub-indicators, including: Ease of Obtaining Loans, Availability of Investment Capital, Safety of Banks, Availability of

Financial Services, and Strength of Legal Rights.

Technological Readiness: It measures the degree of benefits obtained by countries from national and international technological

developments. It comprises 7 sub-indicators, including: Direct Foreign Investment, Technology Transfer, Availability of Advanced

Technology, Subscribers of Mobile Internet, Degree of Technical Assimilation by Corporate Sector.

Market Size: It depends on 4 sub-indicators: Internal Market Size, External Market Size, GDP (based on PPP), Exports as a Percent of GDP.

3. Factors of Innovation and Development:

Development of Business Environment: It comprises appropriateness of business environment, doing business, corporate strategies,

which play a role in stimulating advanced production. It is composed of 9 sub-indicators, including: Development of Production Processes,

Nature of the Comparative Advantage, Number and Type of Domestic Suppliers, Corporate Marketing Staff .

Innovation: to achieve a knowledge economy and a sustainable productivity, it is necessary to depend on innovation. It comprises 7 sub-

indicators, including: the Extent of Availability of Scientists and Engineers, Ability to Innovate, Quality of Scientific Research Institutions,

Corporate Spending on R&D, Number of Patents.




8

WORLD ECONOMY




The growth rate of the world

economy declined slightly in

2014 to reach 3.39%.

FIRST: Gross Domestic ProductThe rate of growth of the world economy declined slightly in 2014 compared to

2013. The global real GDP grew by 3.39% in 2014 compared to 3.41 in 2013. This

decline may be attributed to many key factors. First: the sharp decrease of world

oil prices caused weak growth in some oil-exporting countries such as Venezuela

which recorded a growth rate of -4% in 2014 compared to 1.3% in 2013. Second:

marked decrease of real GDP in Japan in 2014 which recorded a growth rate of

-0.06% compared to 1.6% in 2013. Third: slow down of growth rate in the

emerging market economies and the developing countries of Asia to 7.36% in2014 compared to 7.75% in 2013, reflecting the weak growth in some major

countries which are listed within the emerging market economies of Asia, such as

China which recorded a growth rate of 7.36% in 2014 compared to 7.75% in 2013.

In contrast, the growth rate of the advanced economies improved by 1.8% in 2014

compared to 1.4% in 2013. The Euro Zone, which comprises 18 European

countries, witnessed a remarkable recovery of growth amounted to 0.88% in 2014

compared to -0.46% in 2013.

Table (34) : Real growth rates of GDP

.8 World Economy

Countries 2013 2014 2015*World 3.41 3.39 3.45

Advanced economies 1.36 1.81 2.36Major advanced economies (G7) 1.48 1.67 2.31

United States 2.22 2.39 3.14United Kingdom 1.67 2.56 2.72

Germany 0.21 1.6 1.62France 0.28 0.36 1.16Italy -1.69 -0.42 0.49

Japan 1.61 -0.06 1.04Canada 2.00 2.53 2.16

Euro-zone -0.46 0.88 1.45European Union 0.12 1.39 1.85

Emerging market and developing countries 5.00 4.6 4.26 Middle East and North Africa 2.26 2.44 2.75

Saudi Arabia 2.67 3.47 2.97Kuwait 1.48 1.29 1.73Qatar 6.32 6.14 7.13Oman 4.69 2.95 4.62Bahrain 5.32 4.75 2.67

United Arab Emirates 5.2 3.6 3.15*Forecasts of world GDP growth rates in different economies for the year 2015 issued by the World Economic Outlook

Source: IMF, World Economic Outlook, April, 2015.




Figure :(36) GDP Growth Rate in Global Economies (1995-2015)

Source: Prepared by SECOR, based on IMF data, World Economic Outlook, April 2015.




At the global level, rates of

inflation declined to 3.5% in

2014.

SECOND: Inflation

At the global level, rates of inflation continued to decline reaching 3.5% in 2014compared to 3.9% in 2013. Rates of inflation decreased in many groups of

countries. In the advanced economies, the rate of inflation amounted to 1.36%

in 2014 compared to 1.37% in 2013. The emerging market economies and

developing counties recorded an inflation rate of 5.1% in 2014 compared to

5.9% in 2013; the Euro Zone 0.43% compared to 1.3%; and the MENA region

6.5% in 2014 compared to 9.3% in 2013(table 35).

Table (35) : Inflation Rate (%)Countries 2013 2014 2015*

World 3.9 3.5 3.2

Advanced economies 1.37 1.36 0.35

Major advanced economies (G7) 1.3 1.5 0.27 United States 1.5 1.6 0.1

United Kingdom 2.6 1.5 0.13

Germany 1.6 0.79 0.21

France 0.99 0.62 0.11

Italy 1.28 0.22 0.002

Japan 0.36 2.74 1.01

Canada 0.95 1.9 0.86

Euro-zone 1.3 0.43 0.06

European Union 1.5 0.53 0.03

Emerging market and developing countries 5.9 5.1 5.4

Middle East and North Africa 9.3 6.5 6.2

Saudi Arabia 3.51 2.69 1.99

Kuwait 2.7 2.94 3.34

Qatar 3.06 3.04 1.78

Oman 1.24 1.01 0.97

Bahrain 3.31 2.49 2.12

United Arab Emirates 1.1 2.35 2.11


*Forecasts of world Inflation growth rates in d ifferent economies for the year 2015 issued by the World Economic Outlook




Figure :(37) Global Inflation Rates (995-21 5)

Source: Prepared by SECOR, based on IMF data World Economic Outlook April 2015.




Most of the world economies

witnessed decrease of

unemployment rates during

2014.

THIRD: UnemploymentMost of the world economies witnessed decrease of unemployment rates

during 2014. The rate of unemployment in the advanced economies decreased

to 7.3% in 2014 compared to 7.9% in 2013. In the Euro Zone, it declined from

11.9% in 2013 to 11.6% in 2014. At the level of G7, rates of unemployment

decreased in all member countries except for Italy in where the rate of

unemployment increased from 12.2% in 2013 to 12.8% in 2014 (table 36).

Table (36) : Rates of Unemployment (As a Percent of Labor force)

Countries 2013 2014 2015*


Major advanced economies (G7) 7.1 6.4 6

United States 7.4 6.2 5.5

United Kingdom 7.6 6.2 5.4

Germany 5.2 4.9 4.8

France 10.3 10.2 10.1

Italy 12.2 12.8 12.6

Japan 4 3.6 3.7

Canada 7.1 6.9 6.9

Euro-zone 11.9 11.6 11.1

Saudi Arabia 5.6 5.7 _

Kuwait 2.07 2.07 2.07

Bahrain 4.3 4.1 4.3


*Forecasts of world Unemployment growth rates in different economies for the year 2015 issued by the World Economic Outlook




The size of the international

trade witnessed a slight

decrease in terms of growth rate

in 2014 when it grew by 3.4%

compared to 3.5% in 2013.

ل ة ي ل ر ا ا

ج ف ع ف ط ً ط ت

ج س و ن ل ه بي ق م

ع

ل ة ي ل ر ا ا

ج ف ع ف طً ط تج س و ن ل ه بي ق م

ع

FOURTH: International Trade

The growth rate of the World exports declined from 3.7% in 2013 to 3.3%in 2014. In contrast, the rate of growth of world imports increased from 3.3% in

2013 to 3.4% in 2014. As a result, the size of the international trade witnessed

a slight decrease in terms of growth rate in 2014 when it grew by 3.4%

compared to 3.5% in 2013. However, it is expected to grow by 3.7% in 2015.

At the level of advanced economies and the Euro Zone, exports of goods and

services grew by 3.3% and 4.2% respectively in 2014 compared to 3.1% and

2.1% respectively in 2013. In contrast, the growth rate of exports of goods and

services in the emerging economies and developing countries and MENAeconomies, declined to 3.4% and 0.5% respectively in 2014 compared to 4.6%

and 2.9% respectively in 2013.

With respect to imports of goods and services, the advanced economies and the

Euro Zone economies witnessed growth rates of 3.3% and 4.3% respectively in

2014 compared to 2.1% and 1% respectively in 2013. On the other hand, the

growth rate in the emerging economies and the developing countries and in

MENA economies declined to 3.7% and 7% respectively in 2014 compared to

5.5% and 7.9% in 2013 (table 37).

Table :(37) Growth Rates of International Trade (%)

2013 2014 2015*

growth rate of world trade (goods and services ) 3.5 3.4 3.7

Exports


Euro-zone 2.1 4.2 4.4

Emerging markets and developing countries 4.6 3.4 5.3 Middle East and North African 2.9 0.5 5.4

Imports


Euro-zone 1.0 4.3 4.3

Emerging markets and developing countries 5.5 3.7 3.5

Middle East and North African 7.9 7.0 4.6

Source: IMF, World Economic Outlook, April, 2015.*Forecasts of world trade growth rates in different economies for the year 2015 issued by the World Economic Outlook



957 / 674Legal Deposit No.

2--16-14-5ISSN:



Documents

REPORT E.pdf