Trade and Foreign Aid

The Saudi Arabian government supports a policy of free trade, and although selective tariffs may be used to protect infant industries these are relatively low and of short duration. There are also no exchange controls. The main distinguishing feature of foreign trade is the size of export value relative to GDP. The value of exports reached a peak in 1400/1 when at SR368 bn exports amounted to seventy-one per cent of GDP. If we consider the decade 1390/1400 the value of exports did not fall below fifty-nine per cent of GDP and peaked at eighty-six per cent in 1394. During the same decade import value fluctuated between nineteen and forty-three per cent of GDP. The peak value for imports was in 1401/2 when it stood at SR188 bn or thirty-six per cent of GDP for that year. Although the structure of exports is in the process of change and the growth of the petrochemical industries is likely to reduce the dominance of crude and refined oil, the Kingdom’s exports consist almost exclusively of these latter two products. Trade and economic development in general has been dependent upon both the price and level of production of oil. The downturn in oil prices in the early 1400s has brought a consequent fall in the value of both exports and imports. In 1986 visible exports were valued at SR74 bn, whilst the value of visible imports was SR71 bn.1 The current account of the balance of payments reflecting trade in services and goods recorded a deficit in 1405/6 of SR43 bn. It was two years earlier, in 1403/4, that the Kingdom had seen its first trade deficit since 1389/90.