In 2003, reflecting prudent macroeconomic policies and sharply higher oil prices and production, economic conditions improved significantly. Real GDP growth surged to 7,2% and strong growth in oil revenue generated substantial fiscal and current account surpluses, resulting in a large reserve accumulation. The authorities reaffirmed Saudi Arabia's commitment to ensure oil market stability and indicated that they would continue to meet higher world oil demand by expanding the country's oil production capacity.

In 2004, economic and financial conditions strengthened further as oil prices continued to rise and hit record highs. Saudi Arabia's Monetary Agency's net foreign assets could rise to the equivalent of 15 months of imports and both oil and non-oil GDP are expected to grow at about 5%.

Economic performance

Progress on structural reforms during 2003 and 2004 remained focused on enacting laws to expand areas for private sector activities (including foreign direct investment) and on enhancing the legal foundations for the expansion and regulation of financial and capital markets. Steps have also been taken to facilitate the development of institutions needed to enforce the regulatory framework and to encourage private sector investment
The privatization of state enterprises and the promotion of private sector activities have also been successfully initiated. The Saudiisation policy, aimed at creating private sector employment for nationals, continued to be applied in a flexible manner and was stimulated by measures to promote training and to limit employment of expatriate workers in the private sector.
The country embarks on a new stage of modernization and development as it is responding to the global economic development. After decades of extensive state support to industry, agriculture and social services, the government is indeed opening up most sectors of the country's economy to the domestic private sector and to foreign investment. The Supreme Economic Council (SEC), formed in 1999, initiated a series of measures, including a pioneering Foreign Investment Law and the establishment of the Saudi Arabian General Investment Authority, SAGIA. Other organizations established as part of the reform programme include the Supreme Council for Petroleum and Minerals, the Supreme Commission for Tourism and the Saudi Authority for Industrial Estates and Technology Zones.
SAGIA provides a wide range of services covering both foreign and domestic investment. Its main goals are to improve the investment climate and act as an investment promotion agency. SAGIA operates a one-stop and processes all follow-up procedures to facilitate the establishment of businesses and partnerships. It also provides information on laws and regulations, sectoral reports and statistics.
The World Competitiveness Yearbook now shows that Saudi Arabia's overall competitiveness position is close to the medium of 50 countries , coming just behind Brazil and ahead of Greece. The country ranks 23rd in the GDP level, 17th in gross domestic savings and 25th in gross domestic investment.

Future outlook
The medium -term outlook remains favourable, but high unemployment and a rapidly growing labour force will require expanding non-oil growth and sustaining structural reforms to enhance the competitiveness of the private sector, foster economic diversification and reduce the vulnerability to oil price fluctuations.
Multi-billion dollar privatization programmes are underway in the transport, communications, utilities, health and education sectors, all of which are expected to expand markedly as the government seeks to provide for the needs of the rapidly rising population. Government shares in the banking and investment sectors, tourism and in local refineries are also due to be divested.
Foreign and domestic investment in railways is also becoming important. Proposals for a huge new BOT project intend to link the mining areas in the northwest of the Kingdom with Riyadh and an extension is to reach the industrial city of Jubail in the east and its industrial port. Another railway link is to connect Jeddah in the west with Riyadh and Dammam. The latter network would focus on carrying containers and freight and help to facilitate imports. Other sectors that are listed for privatization include postal services, airports, ports, industrial zones and agriculture.
In the health sector, the government has already moved to transfer the ownership of some state-owned hospitals and medical facilities to the private sector. A comprehensive strategy should lead to further opportunities in the field of medical equipment, health care services, pharmaceuticals, management and consultancy.
With 50 years of steady economic progress, especially in industry and infrastructure, the Kingdom is now offering incentives and opportunities that should result in a substantial rise in foreign investment in the coming years.
With a population of 23 million, the world's largest reserves of crude oil, a world-class infrastructure, important mineral resources and state-of-the-art refining and petrochemical complexes, the country is ready to absorb productive investments in an environment where the rate of return is high by international standards.
As a member of the six-nation Gulf Cooperation Council, the country also stands to benefit from the GCC's implementation of a customs union and a unified common market for the Gulf region, expected to be created by the end of 2007. Saudi Arabia and the neighbouring countries, with a combined population of some 300 million, provide indeed an increasingly important regional market. The Kingdom is also strategically placed to take advantage of world trading opportunities, particularly in Asia , Africa and Europe.

Saudi Arabia has distinguished political, economic and commercial relationships with Belgium. The two countries concluded an agreement of economic and technical cooperation in 1978 and established the Saudi and Belgian Joint Commission in order to promote their coordination and cooperation. King Albert II visited Saudi Arabia four times (in 1967, 1974,1975 and 1982) when he was the Honorary President of the Belgian Office for Foreign Trade. Crown Prince Philippe visited Saudi Arabia in November 1993 and his last visit to the Kingdom was in October 2002.

Basic Economic and Financial Indicators, 2000-2003

Source.: Saudi authorities and International Monetary Fund

Source.: General Union of Arab Chambers of Commerce