Our comprehensive assessment of Saudi Arabia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Saudi Arabia, as well as the latest industry developments that could impact Saudi Arabia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Saudi Arabia before your competitors.

Country Risk

Saudi Arabia Country Risk

BMI View:

Core Views

  • The replacement of Saudi Arabia's heir on April 29, along with other major changes in the country's leadership, represent a further consolidation of King Salman's authority. That said, the elevation of the king's son as second in line to the throne is likely to prove a controversial choice, and could spark future instability.

  • The new king has quickly consolidated his authority over Saudi Arabia's economic policy apparatus, restructuring the country's administration and taking steps to improve the coordination of its vast public investment plans. That said, these changes have so far not greatly altered the economic policy line pursued by Saudi Arabia, and we retain our view that Salman will maintain his predecessor Abdullah's reforms and energy policies.

  • Saudi Arabia'...

To read the full article Register for Free or Login

Saudi Arabia Operational Risk Coverage (9)

Saudi Arabia Operational Risk

BMI View:

BMI View : Saudi Arabia represents an attractive proposition for foreign investors on account of its status as the region's largest economy, with vast hydrocarbons reserves, a long pipeline of infrastructure projects, and a well-established strategy for industrial development and diversification. Trade is facilitated by its established logistics network and international connections, while investors stand to benefit from low crime rates and limited employment costs. However, incoming businesses face significant labour market risks due to a lack of ...

To read the full article Register for Free or Login

Saudi Arabia Crime & Security

BMI View:

BMI View: Along with other states in the Middle East and North Africa (MENA), Saudi Arabia is exposed to the pervasive threat of terrorism which is present throughout the region. The country remains vulnerable to terrorist threats and the potential for social unrest, while geopolitical risks are high due to the Kingdom's ongoing proxy struggles with Iran. Expatriates must also be aware that they are obliged to observe strict Saudi cultural norms and laws. However, Saudi Arabia's low level of criminal risks, coupled with its competent police and counter-terrorism forces, ensure that foreign workers and businesses are largely safe within the country. Taking...

To read the full article Register for Free or Login

Saudi Arabia Labour Market

BMI View:

BMI View: Saudi Arabia offers a large labour pool of national and expatriate workers, with an increasing level of education within its workforce. The country also has a high quality healthcare system and offers low labour costs for employers recruiting local staff. However, factors such as extremely limited female labour force participation, poor quality education, and the 'Saudisation' of the workforce significantly increase operational risks for businesses. In particular, the latter policy has...

To read the full article Register for Free or Login

Saudi Arabia Logistics

BMI View:

BMI View: Saudi Arabia boasts a high-quality transport network that offers investors a number of advantages in terms of trade options, while planned infrastructural projects will ensure that the Kingdom's logistics network is increasingly integrated into regional and international trade routes. Despite a high degree of global connectivity, the country's trade performance remains limited by a moderately burdensome bureaucracy and restricted growth options for an already well developed trade economy. While businesses enjoy an abundance of energy and fuel at subsidised costs, water scarcity and moderate internet penetration rates hold back the country's potential in the realm of utilities. Taking these factors into account, BMI ...

To read the full article Register for Free or Login

Saudi Arabia Trade & Investment

BMI View:

BMI View: As the Arab world's biggest economy, Saudi Arabia offers a large and attractive market to foreign investors. Moreover, a foreign direct investment (FDI) promotion agency, strong economic diversification strategy, and attractive funding and incentive opportunities, further boost the country's appeal. That said, Saudi Arabia lags behind some of its smaller Gulf neighbours in various respects, such as restrictions on FDI in certain sectors (including hydrocarbons), unfavourable tax rates for non-residents, and an opaque and unpredictable legal system. Nevertheless, the country&#...

To read the full article Register for Free or Login

Saudi Arabia Industry Coverage (24)

Agribusiness

Saudi Arabia Agribusiness

BMI View:

BMI View: Saudi Arabia will increasingly be dependent on grain imports, as the country has decided to phase out domestic grain production in a bid to preserve the country's water supply. The government has not abandoned its strategy of self-sufficiency in poultry and has been ramping up incentives to expand capacity production. This strategy has paid off, as the three major producers in the sector have all started heavy investment initiatives. We believe Saudi Arabia will find sufficient grain supply from the Black Sea region and the EU to supply its meat and food processing industry in the coming years. However, the country will remain highly vulnerable to volatile...

To read the full article Register for Free or Login

Autos

Saudi Arabia Autos

BMI View:

Recent developments over the past quarter underline BMI's opinion that Saudi Arabia will become increasingly important as an auto production hub for the Middle East region over the coming years.

In May 2015, Arab News reported that the Saudi National Automobile Manufacturing Company (SNAM) and the Saudi Arabian Public Investment Fund (PIF) have partnered with South Korean firm Daewoo International to build a vehicle manufacturing plant in Saudi Arabia with a collective investment of nearly USD1bn. According to the report, SNAM is the majority shareholder in the project, with 50%, while PIF holds 35% and Daewoo 15%.

'Things are progressing well with a memorandum of understanding signed, while the agreement deal is in the final stage,' said Daewoo International Manager Park Kyung-Ho. The proposed plant,...

To read the full article Register for Free or Login

Commercial Banking

Saudi Arabia Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Consumer Electronics

Saudi Arabia Consumer Electronics

BMI View:

BMI View : Saturation in key device categories such as smartphones and tablets means growth will be subdued in the Saudi consumer electronics market over 2015-2019, with a forecast compound annual growth rate of 2.3%. Although overall growth prospects are limited, we expect the market to remain highly lucrative to vendors due to high incomes and a fashion-conscious local consumer base. The mid-to...

To read the full article Register for Free or Login

Defence & Security

Saudi Arabia Defence & Security

BMI View:

BMI View:  Within an extremely complex region, Saudi Arabia's security and defence situation faces a number of challenges both on the internal and external front. BMI thinks that Saudi Arabia's defence and security policy-making is been affected by internal political rivalry within the Kingdom. Our view is that it is unlikely to become involved in an interstate conflict, and that its traditional leverage in Yemen, where it has previously intervened has been weakened. We think that its decision to join the coalition against the Islamic State is illustrative of a continuing counter-terrorism policy in view of its fears of attacks inside the Kingdom.

On the interstate front, Saudi Arabia seems to be continuing attempts to improve its relations with Iran to iron out some of the regional...

To read the full article Register for Free or Login

Food & Drink

Saudi Arabia Food & Drink

BMI View:

BMI View: We maintain our bullish outlook for Saudi Arabia's food and drink market over our forecast period to 2019. Sales will continue to benefit from rising disposable incomes, favourable demographics, increasing urbanisation and ongoing formalisation of the mass grocery retail sector. The country leads our Risk/Reward Index for the Middle East and North Africa region, showing the potential for the sector in comparison to its neighbours' food and drink industries.

Headline Industry Data (local currency)

  • Total food consumption growth (y-o-y) in 2015: +7.5%; compound annual growth rate (CAGR) 2014-2019: +7.4%

  • Per capita food consumption growth (y-o-y)...

To read the full article Register for Free or Login

Freight Transport

Saudi Arabia Freight Transport

BMI View:

BMI View: The outlook for the Saudi Arabian freight transport sector in 2015 is positive and we forecast robust growth across all freight modes. Rail freight in particular will perform well as the country ramps up its mineral exports, utilising newly developed freight lines like the North-South Railway. Despite the fall in the oil price through the end of 2014 we expect that the economy will continue to grow, driven in large part by private consumption. As a result, demand for containerised goods imports will be strong, boosting box throughput at container ports and intermodal volumes on the roads.

Real growth in Saudi Arabia's total trade will be steady rather than spectacular in 2015 and over our medium-term forecast period to 2019. We forecast a 3.3% expansion this year, followed by 2.7% next year, and project an average rate of 2.5%...

To read the full article Register for Free or Login

Information Technology

Saudi Arabia Information Technology

BMI View:

BMI View: Saudi Arabia offers compelling growth opportunities for IT solution providers across multiple industry verticals owing to the kingdom's strong macro fundamentals and the government's economic diversification plan. We believe that global IT firms with considerable local presence will benefit the most from this opportunity. Local players will also benefit as global vendors look to form partnerships to ease market access. A number of major IT firms have already taken steps in recent years to ramp up their operations in the country, usually through partnerships with local system integrators. The macroeconomic and policy environment is driving IT market...

To read the full article Register for Free or Login

Infrastructure

Saudi Arabia Infrastructure

BMI View:

BMI View : Saudi Arabia's infrastructure and construction sectors offer scale and growth opportunities over our 10-year forecast period to 2024. Private sector caution over the impact of lower oil prices, along with the deterioration of the regional security situation, will see investment dampened slightly. We expect government investment in affordable housing and infrastructure to remain robust, although note the government will begin moves to lessen the pressure being placed on the country's substantial fiscal buffers.

Key Trends And...

To read the full article Register for Free or Login

Insurance

Saudi Arabia Insurance

BMI View:

BMI View: The Saudi Arabian insurance sector should record solid growth over 2015 and the forecast period. This growth will be largely centred on basic, non-life lines such as health and motor. Looking ahead, a key market driver will remain the country's wider macroeconomic performance, which in turn will depend on a return to high oil prices. For now we do not anticipate any significant market re-structuring. Moreover, the sector's retention ratios and penetration levels are likely to remain low and act as significant barriers to growth.

We anticipate that most sub-sectors will post steady single-digit growth over the forecast period as a whole. This is largely due to wider macroeconomic growth forming the main driver across both segments. However, the continuing low oil prices have dampened our expectations for the Saudi economy. We anticipate that this will lead to a similar...

To read the full article Register for Free or Login

Medical Devices

Saudi Arabia Medical Devices

BMI View:

BMI Industry View: Saudi Arabia's medical device regulations are evolving rapidly. Newly introduced rules covering device labelling and private healthcare facilities, as well as more transparency regarding malfunctioning products, means that manufacturers can have increased confidence in the operating environment. The appointment of a new health minister with considerable administrative expertise will also improve oversight in the sector.

Headline Industry Forecasts

  • Saudi Arabia's medical device market has experienced volatile...

To read the full article Register for Free or Login

Metals

Saudi Arabia Metals

BMI View:

BMI View : Saudi Arabia's metals sector is poised for rapid growth in terms of consumption over the next few years as a booming construction industry stokes demand for steel and aluminium as well as well as key base metals such as iron ore. While domestic output will continue to grow at a steady pace, we expect the country's output gap to widen across the main metals sub-sectors, leaving the country ever more reliant on imports to meet demand.

During 2015, Saudi Arabian metals producers will struggle increasingly to meet the growing demands of the country's construction sector and wider economy. The country is in the middle of an infrastructure boom with the Saudi government funnelling increasing levels of investment into the housing sector in particular as it looks to reduce a significant shortfall in affordable housing....

To read the full article Register for Free or Login

Mining

Saudi Arabia Mining

BMI View:

BMI View: The mining sector of the Middle East and North Africa will see strong growth in over the coming years, especially given easing sanctions on Iran. With low base effects, governmental will to increase non-oil revenues and significant resources it appears the region is set for strong growth. We highlight Turkey and Northern Iraq as key areas for growth. That said, the region will remain peripheral in the global mining sector as it continues to underperform due to political instability in much of the region.

The key issue in the Middle East's mining sector presently is Iran's ongoing negotiations with Western powers. Our core scenario is for sanctions to be eased from Q116 which will have be a game changer for the country's beleaguered mining industry...

To read the full article Register for Free or Login

Oil & Gas

Saudi Arabia Oil & Gas

BMI View:

BMI View: Low domestic gas prices and limited foreign participation will continue to weigh on Saudi Arabia's non-associated gas development. Oil production will see incremental growth, as the kingdom looks to meet rising demand domestically and maintain stable export volumes. Fuels consumption will see strong growth, supported by increased domestic refinery output and a high level of subsidisation; however, gas consumption will remain heavily constrained by limitations in the domestic supply. Insufficient gas supply poses major risks to planned downstream expansion projects and diversification in the kingdom's power sector.

Headline Forecasts (Saudi Arabia 2013-2019)
2013 ...

To read the full article Register for Free or Login

Petrochemicals

Saudi Arabia Petrochemicals

BMI View:

BMI View: The main development facing Saudi petrochemicals is the decline in oil prices and their impact on profit margins and feedstock prices. However, over the medium term, Saudi Arabia is likely to become better placed than some smaller ethane-orientated regional rivals as it develops mixed feed crackers and continues efforts to diversify and add value to the production chain. Its main competitor is likely to be Iran, as the international sanctions regime is eased.

Falling oil prices, caused in part by high Saudi crude output levels, have led to a decline in naphtha, prompting falling profit margins for Saudi's ethane-fed petrochemicals industry. Trends in...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Saudi Arabia Pharmaceuticals & Healthcare

BMI View:

BMI View: Over the forthcoming years, growth in Saudi Arabia's pharmaceutical market will remain elevated. The government's commitment to the sector and health insurance expansion will be key drivers of sector growth, with the risks from lower oil prices and the Gulf Cooperation Council drug price unification process remaining minimal.

Headline Expenditure Projections

  • Pharmaceuticals: SAR28.4bn (USD7.6bn) in 2014 to SAR31.8bn (USD8.5bn) in 2015; +11.9% in both local currency and US dollar terms. Forecast in line with Q215.

  • Healthcare: SAR103.2bn (USD27.5bn) in 2014 to SAR119.4bn (USD31.8bn) in 2015; +15.7% in both local currency and US dollar terms. ...

To read the full article Register for Free or Login

Power

Saudi Arabia Power

BMI View:

BMI View: Saudi Arabia will register strong growth in new oil and gas-fired capacity over our forecast period as the government attempts to meet growing demand for electricity from an expanding population. Diversification into nuclear and solar will, however, take longer than anticipated, as lower oil prices mean public spending is rationalised from 2016 onwards and costly expansion plans are pushed back.

Saudi Arabia's power sector will continue to register robust growth over our forecast period, although a sustained period of lower global oil prices is likely to drag on government-backed spending on some of the Kingdom's more ambitious long-term projects. Government investment in new thermal-fired power capacity will remain high in the near term - as the kingdom attempts to keep pace with surging demand for electricity from a growing population. Investment in the diversification of the power sector...

To read the full article Register for Free or Login

Real Estate

Saudi Arabia Real Estate

BMI View:

BMI View:  With governmental policies facilitating market access for international investors, the relatively high sector returns are increasingly attracting foreign investors. While the commercial real estate sector in the office and retail segments is characterised by oversupply, growing demand will help close this gap and help enable room for new projects.

The increasing opening of the Saudi Arabian market is likely to lead to growing investment flows into the country. While one of the largest markets in the region, it has remained largely undeveloped due to regulatory restrictions. Thus, the market provides ample business opportunities which...

To read the full article Register for Free or Login

Renewables

Saudi Arabia Renewables

BMI View:

BMI View: Saudi Arabia's decision to push back its solar expansion target, the absence of a domestic solar industry and the slow pace of project implementation has led us to downwardly revise our solar capacity and generation forecasts. This, coupled with the progress in the UAE's solar industry, has resulted in the UAE topping the Gulf Cooperation Council region for solar capacity over our 10-year forecast period.

We have been following Saudi's solar pursuit closely over the last two years, ever since the government released a white paper - through the King Abdullah City for Atomic and Renewable Energy (Ka-Care) department - stating that it aims to build 41 gigawatts (GW) of solar capacity by 2032 (16GW from solar photovoltaic, 35GW from concentrated solar power). An investment of USD109bn was estimated to be needed to meet the targets.

Key trends...

To read the full article Register for Free or Login

Retail

Saudi Arabia Retail

BMI View:

BMI View: The retail sector in Saudi Arabia continues to grow rapidly despite changing economic and political conditions. The low oil price, the death of King Abdullah, and the war in Yemen have underscored the stability of the Saudi economy, which keeps expanding amid unfavourable conditions. Arguably the most conservative country in the Arab world will become more open in the next five years and the participation of foreign businesses in the Saudi retail sector will grow substantially.

Unlike its wealthy partners in the Gulf Cooperation Council (GCC), particularly, UAE and Qatar, Saudi Arabia has traditionally relied on preserving its economy from substantial participation of foreign capital. From complicated visa procedures to strict ownership laws, the country's vast retail market has been hardly accessible for foreign business owners....

To read the full article Register for Free or Login

Shipping

Saudi Arabia Shipping

BMI View:

BMI View: In light of monthly throughput data from the first seven months of 2015 we have made a number of revisions to our throughput forecasts for a number of Saudi Arabian ports. While we continue to expect strong growth at the port of Dammam, our outlook has dimmed moderately since our last quarterly update. By contrast, we now envisage a decline in throughput at the Jeddah Islamic Port. The contrast between the two facilities is due to increased competition for the Jeddah Islamic Port from a newly opened facility up the coast. Looking at the Saudi Arabian macroeconomics, we continue to believe that these are supportive of ongoing growth in the country's maritime shipping sector, as growth in consumer and infrastructure spending will support increased tonnage throughput....

To read the full article Register for Free or Login

Telecommunications

Saudi Arabia Telecommunications

BMI View:

BMI View: The biggest growth area in Saudi Arabia's telecoms market is high-value services for corporate and individual customers. This view is supported by operators' financial and operational results, which show a strong uptake of next generation mobile and wireline data services as well as convergence services. Mobile revenues, meanwhile, are likely to come under further pressure following the entry of the first mobile virtual network operator (MVNO) to the country. This is likely to erode ARPUs of the established operators further.

Key Data

  • Mobile subscriptions will fluctuate, remaining between 49mn and 50mn for the duration of our 2015-2019 forecast period.

  • The fixed-line market will continue to decline, falling to 4.73mn by 2019.

    ...

To read the full article Register for Free or Login

Tourism

Saudi Arabia Tourism

BMI View:

BMI View: Saudi Arabia is set to see an increase rise in tourist arrivals between 2015 and 2019, with increasing numbers of business travellers and religious visitors boosting the tourist market within the country. Backed by governmental support, transport infrastructure investment and foreign hotel group development, the industry is in good shape. However, regional insecurity and low oil prices present a genuine downside risk that may affect government fiscal spending if continued in the long term.

Job opportunities in Saudi Arabia's tourism and tourism-related sectors will reach 1.7mn by 2020, according to a report by the Saudi Commission for Tourism & National Heritage. The report stated that...

To read the full article Register for Free or Login

Water

Saudi Arabia Water

BMI View:

BMI View: We have substantially expanded our forecasts for the Saudi Arabian water sector, and now cover losses, desalinated water production and non-mains consumption. These additions have resulted in the revision of our existing forecasts, and we now 1.5% growth annually in extraction between 2015 and 2018, a 1.3% growth in consumption, and decline in water losses reaching as much as 4% in 2018, as investment into infrastructure and improved regulatory overviews start to bear fruit.

The Saudi Arabian water sector remains one of the most active in the region and offers some of the greatest opportunities to private sector participants. In particular, the continued growth in desalination projects and ongoing water reclamation developments offer significant...

To read the full article Register for Free or Login

Latest Saudi Arabia Articles

  • Oil prices will remain anchored until 2018. The return of Iranian oil to ma...

  • The broad shift towards hawkish monetary policy in emerging markets will re...

  • The rationalisation of public spending due to lower oil prices, coupled wit...

Latest Saudi Arabia Blogs

  • BMI View: A devaluation of the Saudi riyal is highly unlikely. Such a move ...

  • BMI Research has just published a special report, Top 10 Political Successi...

  • The tentative rapprochement between Iran and the US, which began in the sec...

Latest Saudi Arabia Podcasts

  • As a decade of rising oil prices comes to an end, OPEC's decision to l...

  • The rise of jihadist group Islamic State (IS) in Syria and Iraq poses ...

  • BMI's Key Projects Database is a proprietary tool which not only helps...