Two decades ago, Saudi Arabia was classified as a wealthy nation with one of the best living standards in the world. Today, this classification no longer works. At the height of the oil boom in 1980, the per capita income of the Gulf Kingdom was as high as $17,000, which was one of the best rates in fixed prices. Last year, it did not exceed $8,200, lagging far behind most other Gulf oil producers and industrial nations.
| That's what happens when you piss it all away on mosques and jihad... |
Experts blamed poor economic performance, sharp fluctuations in oil prices and production, and the rapid growth in the country's population. "What do you expect from a country relying heavily on oil exports and whose population is growing faster than its economy," said Bushr Bakheet, a Saudi economist.
| Except that the neighbors aren't having the same problems. Wonder why? |
Saudi Arabia's dilemma is in a sharp contrast with neighbouring Kuwait, Qatar and the UAE. The per capita income of those nations has steadily increased over the past two decades to keep them among the countries classified as superrich. It was not by magic nor was it a miracle. The simple reason was that the oil output of those countries is now much higher while Saudi production has sharply dwindled. Although Saudi Arabia's oil resources of around 261 billion barrels are as big as 52 times Qatar's five billion barrels, the per capita income of this tiny Gulf nation was as high as four times Saudi Arabia's income last year. During the 1980-2003 period, Saudi Arabia's private sector recorded a steady growth, galloping in some years by as fast as seven percent. But that was not the case in the oil and the government sectors, which have contracted in most years to offset the sharp expansion in the private sector. As a result, growth in the gross domestic product fell short of the population growth of around 3.5 per cent.
Figures by the Saudi Arabian Monetary Agency (SAMA) showed the per capita income of Saudi Arabia peaked at around 62,500 Saudi riyals in 1981, one of the highest in the world. In 2003, it dived to 30,450 riyals. Qatar's per capita income hit its highest level of around $29,000 last year as a result of higher oil production, mega gas projects and its low population. The UAE and Kuwait also had high per capita incomes of around $19,000 and $17,000 respectively. From just 30.4 billion riyals in 1971, Saudi Arabia's GDP skyrocketed to around 622.5 billion riyals in 1981, far outpacing growth in the population, which increased from nearly six million to 10.1 million. During that period, the Kingdom's oil production was growing fast to peak at nearly 10 million barrels per day in 1981 before it began its gradual decline in the following years. In the absence of high growth in other sectors, the GDP continued to plummet to reach as low as 320 billion riyals in 1987 while the population surged to 13.4 million. In the past few years, a recovery in oil prices and production allied with reforms and strong growth in some non-oil sectors to push the nominal GDP to its highest level of around 730 billion riyals in 2003. But in real prices, it was as low as half its level in 1981, considering inflation rates and the weakening dollar.
SAMA's figures showed Saudi Arabia's population more than doubled from 10.1 million in 1981 to around 24 million last year but the GDP expanded by only 13 per cent. The rapid growth in the population and lower than expected growth in the domestic economy has created a serious unemployment problem in Saudi Arabia, prompting calls for sacking foreign labour and radical reforms to ease dependence on volatile oil sales. A breakdown showed the Kingdom's oil sector was to blame for the plight as it plunged from a record 380 billion riyals in 1981 to 265 billion riyals last year. The private sector, however, swelled from nearly 181.5 billion riyals to 295 billion riyals in the same period.
Per capita incomes of some GCC states* Saudi Arabia: Peaks at around 62,500 Saudi riyals in 1981, one of the highest in the world. In 2003, dives to 30,450 riyals.
* Qatar: Hits highest level of around $29,000 last year as a result of higher oil production, mega gas projects and its low population.
* UAE and Kuwait: High levels of around $19,000 and $17,000 respectively. |