Essay on Saudi Economy and its Considerations faced in terms of Currency

The petroleum, as well as the linked industries or the businesses, dominate the economy of Saudi Arabia. The kingdom of Saudi Arabia ranks at the first number worldwidein the sense of the oil reserves about one-fifth of the known reserves of the world. Furthermore, in the southeast towards the south, the deposition of oil is located form Kuwait within the Rub al-Khali as well as Iraq as well as under the waters of Gulf of Persia.

The entire economic situation was changed by the discovery of oil in Saudi Arabia. A concession of the oil prospect was granted to a British company by Ibn Saud while it was never being exploited by this concession in the early times within the year of 1923. Therefore, oil was discovered in the year of 1938, World War II shortened the activities of the oil production till near its ends.To meet the enhancing demand of postwar, the rapid expansion of the oil industry followed the RasTanura refinery was unlocked in the year of 1945(Sarfraz, 2015).

Economic Overview of Saudi Arabia

The second-largest oil reserves around the world are the Saudi oil reserves, as well as the second-largest producer as well as leading exporter of oil of the world is Saudi Arabia. According to the figures that are provided by the government of Saudi Arabia, the recognized reserves are assessed for being around 260 billion barrels. Furthermore, it is about one-quarter of the world's oil reserve. While under the pressure as well as close to the surface of the earth, the petroleum in Saudi Arabia is not only abundant.

To extract petroleum, it makes the oil very cheap as well as hence, more profitable in Saudi Arabia than in numerous other places. Furthermore on the petroleum sector, its financial records tell roughly that 90 percent of export earnings, 87 percent revenues of Saudi Arabia as well as 42 percent GDP. The production, as well as the oil reserves of Saudi Arabia, are largely achieved by the corporation of Saudi Aramco which is owned by the state.

It is come by GDP of 40% from the private sector. Playing a very difficult and complicated role in the economy of Saudi Arabia, an estimated 7.5 million foreign workers legally within the country of Saudi Arabia in the service sectors as well as the oil in an exemplary manner.Furthermore, the growth of theprivate sector has been encouraged by the government of Saudi Arabia, as well as for the enhancement of the opportunities of employment for the swelling of the population of Saudi Arabia.

In recent periods, it has been begun by the government for permitting the participation of the foreign investors as well as the private sector, for instance, thetelecom, power generation as well as acceded to the WTO. The government of Saudi Arabia was enabled by the high oil prices to post budget surpluses, education, and the development of infrastructure,the salaries of the government employees as well as the boost spending on the training for the jobs.

Through a series of plans of the five years, the long-range development of economy has been directed.The communication facilities as well as the basic transport of most of the country, the first two or five years plans were established for that. Furthermore, it is about one-quarter of the world's oil reserve. While under the pressure as well as close to the surface of the earth, the petroleum in Saudi Arabia is not only abundant(Sahin, 2006).

To diversify the economy of the country, to enhance the production of domestic food, the training of health services as well as vocational training, to improve the education as well as further improved communication routes among the different area of the country are planned by the subsequent while it was not the economic boom without a price.The policies of the government encourage the larger families that let for a marked enhancement in the population as the prices of the oil stagnated in the year of 1990.GDP per capita initiated actually for falling in the actual terms as we as the young of kingdom, as well as the workforce that was highly educated initiated to face unemployment for the very first time as well as higher rates of unemployment. Although, it was reserved by such kind of trends such as the prices of oil again come higher. Furthermore,it directed the five years' plans for the enhancement of the share of private organizationswithin the economy of the country in an effort for movingfar away from the dependence on to the making new jobs as well as the exports of the oil.

The diversification of the government of Saudi Arabia centrally drive is the conversion of the raising public fund investment within thesovereign of $2 trillion dollars wealth fund by trading the assets of the state as well as the deprivinga small stake within the Saudi Aramco oil company that is owned by the state.The fiscal deficit was allowed by the higher oil prices for shrinking the actual percent of GDP from 26% within the year 2016 to 9% within the year of 2018. It would be reduced by the subsidy cuts as well as a planned tax of value-added in the addition.Furthermore, to improve the regulatory efficiency would increase the total competitiveness for the other reforms.

Currency Values of Saudi Economy and its Considerations faced in terms of Currency

The fixed exchange rate of Saudi Arabia's rule of the currency associated with the dollar that serves economy well based on oil as well as it is supporting currently its policy of the counter cyclic. It was reported. Furthermore, Muhammad Al-Jasser, who heads the monetary agency of Saudi Arabia, he also said that a budget deficit may not be had by the country such as it is currently predicted by professionals of the governmentIf the prices of the oil remained same at the same level where they are. The economy of Saudi Arabia is heavily dependent on the production of oil rather than other resources. It is also listed and noted for about its domestic product gross around eighty-five percent within the year of 2009 as well as the revenue in the sense of the budget, as well as 31 percent domestic gross product that leaves theexposed kingdom for the volatility of price. The biggest Arab economy has collected the huger reserves during boost up in or during the six-year oil price as well as it is also planning for spending more than around 400 billion dollars over five years for the upgradation of the economic infrastructure consisting of roads as well as the airports (Gagnon, 2012).

            It can be said after looking at different elements associated with the Saudi economy that it has always been dominated by its oil & petroleum sector, and it is going to be the future trend as well. There are various considerations with regards to currency, which may reveal that things can be difficult for a country, which does not have oil reserves, so oil prices may vary for them as per currency fluctuations and dollar’s perspective. But Saudi Arabia does not have these problems, as they have enough oil reserves and they facilitate oil prices in their own country, and when oil prices are fluctuated due to dollar, they increase their rate for the world, which also has a huge impact on overall oil prices all around the globe.

 References of Saudi Economy and its Considerations faced in terms of Currency

Gagnon, J. E. (2012). Combating widespread currency manipulation. . Policy Brief in International Economics, 12-19.

Sahin, H. (2006). MENA countries as optimal currency areas: Reality or dream. Journal of Policy Modeling,, 5(85), 511-521.

Sarfraz, M. (2015). An intelligent paper currency recognition system. Procedia Computer Science, 538-545.