The world's largest economies by 2050: Saudi Arabia
Saudi Arabia ranks 16th by GDP (PPP), and its oil wealth is managed by the state giant Saudi Aramco. The non-oil economy is now growing fast, even as hydrocarbons stay central to modern manufacturing.
“The world’s largest economies by 2050” (Saudi Arabia)
According to the IMF, Saudi Arabia’s economy ranks 16th by GDP (PPP) ($2,249 billion), behind Iran. Control over the huge oil and gas fields belongs to the state company Saudi Aramco, the largest and most efficient oil and gas company, with a market capitalisation of more than $6.5 trillion. There is much talk about the efficiency of private versus state companies in the oil and gas industry, that private companies are better adapted to market realities and perform more efficiently in market conditions. But if you look closely at the countries of the world that produce oil and gas, in almost all of them oil and gas extraction and control over the fields are in the hands of either wholly state-owned companies or joint-stock companies with an overwhelming controlling stake held by the state. But I will examine that in more detail in other pieces (a very interesting topic!).
“The world’s largest economies by 2050” (Saudi Arabia)
The fact that Saudi Arabia holds the world’s second-largest oil reserves (268 billion bbl), after Venezuela, is an enormous source of wealth and a geo-economic and geopolitical advantage! Yes, Saudi Arabia is hooked on oil, but the developed countries, the United States, the United Kingdom, Japan, Germany, China and many others, are hooked on the same thing. As we know, no modern manufacturing is conceivable without hydrocarbons; practically everything is made from oil. Modern cars and electric vehicles, for instance, are half made of plastic, which comes from oil. A car’s leather interior is also made from oil, not from animal hides at all. Car tyres are made from hydrocarbons. The world’s production of synthetic clothing and footwear, of electronics, the synthetic casings of modern televisions and consumer electronics: much of it likewise comes from a hydrocarbon source. The use of plastic in aircraft manufacturing can cut an aircraft’s weight by up to 50%, which improves payload and range (I examined the great importance of plastic to the economy of the future, and what it is made from, in detail in “Plastic and the Economy”, published on the channel on 3 September 2024).
“The world’s largest economies by 2050” (Saudi Arabia)
At the same time, Saudi Arabia’s General Authority for Statistics reports that the share of the non-oil economy grew by 4.9%, reaching a high of 23.2% of GDP, followed by the public sector at 16% and wholesale and retail trade and the hotel and restaurant business at 10.1% of GDP. The share of the utilities sector also grew by 8.9% year on year. In other words, the structure of Saudi Arabia’s economy is undergoing significant positive change, despite falling revenues from the oil and gas industry and a contraction in aggregate GDP for four quarters in a row (the oil sector’s share of GDP is shrinking).