ECONOMIC AND COMMERCIAL OFFICE
Saudi Arabia’s growth prospects remain strong in the medium-long term. The IMF forecasts that the economy will grow at around a 4% rate between 2010 and 2011, hence it foresees a growth pattern in line with that of the enlarged Middle East and North Africa area. Saudi authorities are committed to pursuing, despite the difficulties related to the economic crisis, investment plans devoted to reducing unemployment and diversifying the economy. The main boost to development will come from public expenditure, sustained by the large surpluses accumulated in the last years thanks to oil related exports. The Saudi government has, in fact, launched in 2009 a stimulus package worth around 126 billion USD (475 billion SR). The 2009 budged, the most consistent in the history of the kingdom, carries a 15.8% overall expense increase, worth 17.3 billion USD (65 billion SR), with respect to the budget of the previous fiscal year. The amounts deployed demonstrate the commitment of the Saudi government to improve the level of social services and further develop the level of the country’s infrastructures. However, the budget takes into account the constraints to fiscal policy arising in the aftermath of the downturn and especially in an economic phase characterized by growing inflation, consistent monetary supply and volatile oil prices.
Fig. 1 The weight of Saudi economy with respect to GCC countries and Yemen (Jan - Jun 2009)
Source: Elaboration of data from the World Economic Outlook 2009, IMF
Italy’s trade ranking and bilateral exchange with the Kingdom
Italy confirms is its self as one of the leading commercial partners of the kingdom of Saudi Arabia. IMF data regarding the 2008 trade exchange rank Italy fifth among the largest exporters to the Kingdom, with a 4.86% market share, and eight among importers, with a 2.05% market share.
However, ISTAT (the Italian Institute for Statistics) data relative to the first semester of 2009 highlight a 38,8% decrease of Saudi-Italian trade exchange with respect to the same period of the previous year (from 3.603,4 to 2.169 millions of euros). This decrease is due mostly to the fall of the value of Italian imports from the kingdom (-55,6%), compared to a milder slowdown of Italian exports (-21,8%). All this led to the improvement of Italy’s import-export ratio and to the emersion of a positive balance in Italy’s trade balance (+464,6 million euros in the first semester of 2009, compared to -236 million euros in the first semester of 2008).
Fig. 2 Trade bilateral exchange trend
The effects of the economic crisis, if on the one hand transformed Italy’s trade deficit into a surplus, on the other led to a reduction of Italy’s market share in Saudi Arabia, as showed by IMF data relative to the first semester of 2009. According to these preliminary data, Italy should have passed in six position among export countries (with a 27% export decrease) and in fifthnth position among importers (due to a 50% fall of Italian imports). The second semester of the year should have witnessed, instead, a reversal of this trend as a result of a pick up in Italian exports (+ 7% between the first and the second trimester of 2009).
Fig. 3 Evolution of the market share of the principal commercial partners of the Kingdom
Comparison of the Italian commercial exchange with Saudi Arabia, GCC countries and other Arab countries
A comparison of Italian commercial exchange with Gulf countries and leading countries of the Arab world (ISTAT data first semester 2009) shows that Saudi Arabia remains a fundamental partner for Italy.
In particular, Saudi Arabia is:
- the second largest trade partner of Italy among Gulf countries and the fifth among the entire Arab world (after Lybia, Algeria, Tunisia e UAE);
- the third buyer of Italian goods among Arab world countries (after United Arab Emirates and Algeria), having overtaken Tunisia.
Fig. 4 Italian exports towards the Arab world (Jan - Jun 2009)
Source: Elaboration by Camera di Commercio Italo Araba on ISTAT data
Embassy’s grafical elaboration
Fig. 5 Trade exchange Italy – GCC countries (Jan - Jun 2009)
Source: Elaboration by Camera di Commercio Italo Araba on ISTAT data
Embassy’s grafical elaboration
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