A Study on Economic Diversification in Saudi Arabia

Saudi Arabia’s economy has grown very strongly in recent years as it has benefited from high oil prices and output, strong
private sector activity, increased government spending, and the implementation of a number of domestic reform initiatives.
Rising oil prices and oil production have also resulted in large external and fiscal surpluses, and government debt has declined
to very low levels. The economic outlook remains favorable. Nevertheless, the substantial drop in oil prices since the summer of
2014 is an important risk to the outlook.
The Saudi Arabian economy remains very dependent on oil revenues to support growth and fiscal and external balances—over
90 percent of fiscal revenues and 80 percent of export revenues come from the sale of oil. Developments in the global oil market
are therefore central to the economic outlook. Lower oil prices will have an immediate negative effect on the fiscal and external
balances, and over time will also likely lead to slower growth