Table 1.a.
shows that GDP of Saudi Arabia in 2020 was 2,637,629 million SAR.
In 2020 consumption (C) of Saudi citizens was 1,140,198 million SAR, investment (I), 574,805 million SAR, Government Purchases (G), 914,997 million SAR, and finally foreigners consumed 690,000 million SAR worth of domestically produced goods and services of Saudi Arabia. If we perform some statistical analysis on the data given Table 1.a.
we find that more volatile component of GDP of Saudi Arabia is investment spending over the period 2016 and 2020. Investment spending shows the same characteristics in many economies.
Table 1.a. – Components of GDP of Saudi Arabia at Current Prices
Source: General Authority for Statistics of Saudi Arabia
| Total (Millions of Saudi Riyals) | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Consumption | 1,035,457 | 1,063,644 | 1,123,277 | 1,163,254 | 1,140,198 |
| Investment | 554,241 | 569,499 | 628,494 | 715,845 | 574,805 |
| Government Purchases | 818,499 | 806,488 | 915,422 | 883,515 | 914,997 |
| Exports | 753,225 | 899,975 | 1,180,937 | 1,071,975 | 690,608 |
| Less Imports | 753,225 | 757,409 | 785,960 | 821,028 | 682,979 |
| Net Exports | 10,312 | 142,566 | 394,977 | 250,947 | 7,629 |
| GDP | 2,418,509 | 2,582,197 | 3,062,170 | 3,013,561 | 2,637,629 |
Table 1.B.
tells that in 2020, consumption made up 43.23% of GDP of Saudi Arabia. Warning! As you may remember, since production equals expenditure equals income, therefore, in 2020 total income of Saudi citizens was 2,637,629 million SAR, which is 2020 GDP of Saudi Arabia.
However, you may also remember that consumption expenditures are total spending on goods and services, both domestic and imported. Therefore, a correct interpretation that consumption made up 43.23% of GDP of Saudi Arabia is that in 2020 Saudi citizens spent 43.23% of their income on consumption which included both imported and domestic goods and services.
You confidently apply this logic to other components, G, and I. In each year in the period 2016 and 2020, the largest component of GDP of Saudi Arabia from the expenditure perspective was consumption (average of 40.50%). Then came government purchases (average of 31.80%), then investment (average of 22.21%), and then net exports (average of 5.49%). This pattern is observed repeatedly over time and across countries.
Table 1.b. – Percent Share of Components of GDP of Saudi Arabia
Source: General Authority for Statistics of Saudi Arabia
| Share of GDP | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Consumption | 42.81% | 41.19% | 36.68% | 38.60% | 43.23% |
| Investment | 22.92% | 22.05% | 20.52% | 23.75% | 21.79% |
| Government Purchases | 33.84% | 31.23% | 29.89% | 29.32% | 34.69% |
| Net Exports | 0.43% | 5.52% | 12.90% | 8.33% | 0.29% |
| Total | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
Table 1.c.
tells us a story of annual growth of GDP and its components. Both 2019 and 2020 Saudi Arabia’s economy did not perform well. It shrank by 1.59% per annum in 2019 and 12.47% per annum in 2020. However, we are in the business of descriptive analysis. We want to tell a story about what has happened. Economies are complex entities and economics is full of opposing theories.
Thus, we, for now, will not get into making inferences about reasons of these fluctuations in overall GDP of Saudi Arabia. In other words, we are not, for now, in the business of telling why it has happened except in cases where reasons are easily recognizable. Yes, in this huge contraction in GDP in 2020 was due to Coronavirus Pandemic that has been sweeping the globe.
When we look at Table 1.c. closely, we observe that in 2019 contraction in GDP both government purchases and net exports declined but consumption and investment spending increased. In 2020 contraction, on the other hand, investment spending and net exports declined considerably whereas the decline in consumption spending was marginal and government purchases increased moderately.
Table 1.c. – Annual Growth Rate of Components of GDP of Saudi Arabia
Source: General Authority for Statistics of Saudi Arabia
| Percent Annual Growth | ||||
| Year | 2017 | 2018 | 2019 | 2020 |
| Consumption | 2.72% | 5.61% | 3.56% | -1.98% |
| Investment | 2.75% | 10.36% | 13.90% | -19.70% |
| Government Purchases | -1.47% | 13.51% | -3.49% | 3.56% |
| Net Exports | 19,48% | 31.22% | -9.23% | 35.58% |
| GDP | 6.77% | 18.59% | -1.59% | -12.47% |
Table 2.A. and 2.B.
clearly indicate that the leading activity in generating GDP in Saudi Arabia has been mining and quarrying sector with the average share of the production 25.6% between 2016 and 2020.
The second leading producer of GDP in KSA has been government services during the same period. Government services consist of wide-ranging activities including health, education, policing, defense and so on. Remember we are not looking GDP from the expenditure perspective.
We are looking at it from the production perspective. When we have discussed the expenditure perspective, we saw that in 2020, the government consumed almost 914,997 million SAR of GDP (Table 1.a.) in 2020, whereas in the same year, from the production perspective, the government generated 577,968 million SAR of GDP.
Table 2.a. – Gross Domestic Product by Kind of Economic Activity at Current Prices
Source: General Authority for Statistics of Saudi Arabia
| Total ( Millions of Saudi Riyals ) | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Agriculture, Forestry & Fishing | 64,952 | 65,290 | 65,493 | 66,204 | 67,046 |
| Mining & Quarrying | 533,636 | 655,761 | 972,350 | 855,282 | 535,694 |
| Manufacturing | 312,160 | 332,901 | 371,730 | 363,466 | 319,555 |
| Electricity, Gas & Water | 38,395 | 40,621 | 45,326 | 44,167 | 41,481 |
| Construction | 159,575 | 154,592 | 145,857 | 155,674 | 161,096 |
| Wholesale & Retail Trade, Restaurants & Hotels | 276,088 | 274,970 | 271,383 | 288,288 | 266,920 |
| Transport, Storage & Communication | 160,587 | 165,173 | 166,019 | 175,323 | 162,550 |
| Finance, Insurance, Real Estate & Business Services | 324,848 | 342,666 | 347,521 | 359,048 | 363,504 |
| Community, Social & Personal Services | 57,371 | 58,593 | 58,017 | 58,278 | 50,827 |
| Imputed Bank Services & Personal Services | 22,482 | 22,826 | 23,219 | 24,366 | 26,282 |
| Sub - Total | 1,905,131 | 2,067,743 | 2,420,478 | 2,341,364 | 1,942,392 |
| GDP | 2,418,509 | 2,582,197 | 3,062,170 | 3,013,561 | 2,637,629 |
Table 2.b. – Percent Share of Economic Activities in GDP of Saudi Arabia
Source: General Authority for Statistics of Saudi Arabia
| Share Of GDP | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Agriculture, Forestry & Fishing | 2.7% | 2.5% | 2.1% | 2.2% | 2.5% |
| Mining & Quarrying | 22.1% | 25.4% | 28.4% | 28.4% | 20.3% |
| Manufacturing | 12.9% | 12.9% | 12.1% | 12.1% | 12.1% |
| Electricity, Gas & Water | 1.6% | 1.6% | 1.5% | 1.5% | 1.6% |
| Construction | 6.6% | 6.0% | 4.6% | 5.2% | 6.1% |
| Wholesale & Retail Trade, Restaurants & Hotels | 11.4% | 10.6% | 8.9% | 9.6% | 10.1% |
| Transport, Storage & Communication | 6.6% | 6.4% | 5.4% | 5.8% | 6.2% |
| Finance, Insurance, Real Estate & Business Services | 13.4% | 13.3% | 11.3% | 11.9% | 13.8% |
| Community, Social & Personal Services | 2.4% | 2.3% | 1.9% | 1.9% | 1.9% |
| Imputed Bank Services & Personal Services | 0.9% | 0.9% | 0.8% | 0.8% | 1.0% |
| Government Services | 20.2% | 19.0% | 18.2% | 19.3% | 21.9% |
| Gross Domestic Product | 100% | 100% | 100% | 100% | 100% |
Table 2.C.
Table 2.c. provides us with annual growth rate of economic activities in GDP in KSA. From Table 2.c.
we observe that because of the Coronavirus Pandemic almost all activities in 2020 had negative growth rates except agriculture,
forestry agriculture, construction, finance, insurance & real estate, business services and imputed bank services charge. Imputed bank services charges are costs incurred by banks in providing services such as handing currency, clearing checks and so on, for which bank clients rarely pay.
Table 2.c. – Annual Growth Rate of Economic Activities in GDP of Saudi Arabia
Source: General Authority for Statistics of Saudi Arabia
| Percent Annual Growth | ||||
| Year | 2017 | 2018 | 2019 | 2020 |
| Agriculture, Forestry & Fishing | 0.52% | 0.31% | 1.08% | 1.27% |
| Mining & Quarrying | 22.89% | 48.28% | -12.04% | -37.37 |
| Manufacturing | 6.64% | 11.66% | -2.22% | -12.08% |
| Electricity, Gas and Water | -5.80% | 11.58% | -2.56% | -6.08% |
| Construction | -3.12% | -5.65% | 6.73% | 3.48% |
| Wholesale & Retail Trade, Restaurants & Hotel | -0.40% | -1.30% | 6.23% | -7.41% |
| Transport, Storage & Communication | 2.86% | 0.51% | 5.60% | -7.29% |
| Finance, Insurance ,Real estate & Business Services | 5.49% | 1.42% | 3.32% | 1.24% |
| Community, Social & Personal Services | 2.13% | -0.98% | 0.45% | -12.78% |
| Imputed Bank Services Charge | 1.53% | 1.72% | 4.94% | 7.86% |
| Government Services | 0.73% | 13.41% | 4.18% | -0.39% |
| Gross Domestic Product | 6.77% | 18.59% | -1.59% | -12.47% |
Table 3
Let’s now focus on 2020 GDP of KSA. Based on Table 3.a., compensation of employees was 852,635 million SAR. Net operating surplus of businesses was 1,305,440 million SAR, which is gross operating surplus (1,617,877 million SAR) minus consumption of fixed capital (312,44 million SAR).
Based on these figures, we observe that in 2020, the share of compensation of employees was 32.33% of 2020 GDP, whereas the share of gross operating surplus of businesses was 61.34%. For the same year, net operating surplus of businesses was 49.49%. In sum, the share of employees in GDP was less than that of employers in 2020
In fact, we can argue that (based on Table 3.a. and Table 3.b.), in the period between 2016 to 2020, employers had the more share in GDP than employees in KSA. In the United States of America, on the other hand, employees have the significantly higher share of GDP than employers.
Table 3.a. – Gross Domestic Product at Factor Cost
Source: General Authority for Statistics of Saudi Arabia
| Total ( Millions of Saudi Riyals ) | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Componsation Of Employees | 702,810 | 711,550 | 802,415 | 841,146 | 852,635 |
| Gross Operating Surplus | 1,672,039 | 1,817,826 | 2,108,980 | 1,995,515 | 1,617,877 |
| Consumption of Fixed Capital | 278,835 | 279,172 | 277,766 | 293,509 | 213,437 |
| Indirect Taxes Less Subsidies | 43,660 | 52,823 | 150,174 | 176,509 | 167,117 |
| Gross Domestic Product | 2,418,509 | 2,582,198 | 3,062,170 | 3,013,561 | 2,637,629 |
Table 3.b. – Percent Share of Factor Costs in GDP of Saudi Arabia
Source: General Authority for Statistics of Saudi Arabia
| Shares In GDP | |||||
| Year | 2016 | 2017 | 2018 | 2019 | 2020 |
| Componsation Of Employees | 29.06% | 27.56% | 26.20% | 27.91% | 32.33% |
| Gross Operating Surplus | 69.14% | 70.40% | 68.87% | 66.22% | 61.34% |
| Indirect Taxes Less Subsidies | 1.81% | 2.05% | 4.92% | 5.87% | 6.34% |
| Gross Domestic Product | 100% | 100% | 100% | 100% | 100% |
Table 3.c.
Tells us that in 2020, annual growth of compensation of employees in KSA was around 1.37 percent (increasing),
whereas annual growth of gross operating surplus of businesses was negative 18.92 percent (decreasing). The same pattern can be observed for the year 2019.
| Percent Annual Growth | ||||
| Year | 2017 | 2018 | 2019 | 2020 |
| Componsation Of Employees | 1.24% | 12.77% | 4.83% | 1.37% |
| Gross Operating Surplus | 8.72% | 16.02% | -5.38% | -18.92% |
| Indirect Taxes Less Subsidies | 20.99% | 185.43% | 17.33% | -5.53% |
| Gross Domestic Product | 6.77% | 18.59% | -1.59% | -12.47% |
Qatar
Saudi Arabia
United Arab Emirates