Saudi Arabia occupies a central position in the Middle East, shaped by its role as the custodian of Islam’s holiest sites and one of the world’s largest holders of proven oil reserves. The Kingdom’s modern state emerged in the early 20th century and was rapidly transformed following the commercial discovery of oil in 1938 and the subsequent development of its national energy industry. Its strategic location linking the Gulf to Africa and Asia has enabled it to become a pivotal actor in global energy markets, regional diplomacy and international trade. Today, Saudi Arabia is the only Arab country represented in the G20, reflecting both its economic weight and its influence in multilateral decision-making.
In recent years, the Kingdom has launched an ambitious national transformation under Vision 2030 aimed at reducing reliance on hydrocarbons and reshaping economic and social systems for longterm resilience. Large-scale investment programmes and flagship development projects are designed to cultivate new engines of growth in sectors such as tourism, manufacturing, logistics and mining, while fostering innovation and increasing private sector participation. Although oil revenue remains a key source of fiscal strength, global energy transitions and shifting geopolitical dynamics are reinforcing the urgency of diversifying the economy. As a result, both creating a more dynamic, knowledge-based economic model and expanding non-oil activity stands at the core of the Kingdom’s forward-looking longterm development strategy.
Geography
Occupying roughly 2.1m sq km and close to four-fifths of the Arabian Peninsula, the Kingdom is the largest country in the Middle East, the 13th-largest in the world and the fifth-largest in Asia. Its landscape is defined by sweeping deserts, gravel plains and elevated plateaus, including Rub Al Khali (Empty Quarter) in the south-east, the largest continuous sand desert in the world at about 650,000 sq km. Permanent rivers and natural lakes are absent; instead, water flows through seasonal wadis (dry riverbeds) and extensive desalination is relied upon to meet residential and agricultural needs – particularly as less than 1% of national land is naturally arable. Borders extend to Iraq, Jordan and Kuwait to the north; Qatar and the UAE to the east; and Oman and Yemen to the south. Saudi Arabia also maintains a direct link to Bahrain via the 25-km King Fahd Causeway, with coastlines opening westwards to the Red Sea and eastwards to the Gulf.
Climate
Climate conditions are hot and arid throughout the year, with summers between May and September marked by temperatures that often surpass 45°C, especially in inland regions where humidity is low. Cooler weather arrives between November and February, when average daytime temperatures fall to 20-23°C and night-time frost can occur in northern and central highlands, occasionally accompanied by snowfall. Seasonal transitions may be punctuated by strong winds and violent sandstorms, known locally as haboobs. Average annual precipitation is around 8 cm, almost all of which falls between December and March, when tropical winds can cause monsoons in the south and south-west.
History
Across the Arabian Peninsula, arid landscapes have shaped patterns of human settlement for millennia. Despite the predominance of desert terrain, the region supported a long tradition of nomadic and semi-nomadic communities who travelled in response to seasonal resources and trade opportunities. Archaeological findings indicate organised human presence as far back as the third millennium BCE, particularly associated with the Dilmun civilisation, which played a central role in regional trade networks linking Mesopotamia, the Indus Valley and the Arabian Gulf. Dilmun’s influence extended across areas corresponding to modern-day Bahrain, Oman and Qatar, as well as portions of eastern Saudi Arabia and southern Iran. By the first millennium BCE, the Thamud tribe emerged in the peninsula’s north and western regions. They developed settlements, rock inscriptions and trade routes around areas that correspond today to what is now Al Madinah and parts of northern Saudi Arabia. Their presence continued until the mid-first millennium CE, contributing to the cultural and linguistic foundations of the peninsula.
A defining shift in the region’s history occurred in the 7th century CE with the emergence of Islam in Makkah, following the birth of the Prophet Muhammad around 570 CE. Within a few decades of the Prophet’s passing in 632 CE, the Arabian Peninsula had largely unified under the new faith. Under subsequent leadership, including the Rashidun and Umayyad caliphates, Islam expanded rapidly beyond Arabia. By the 8th century CE, the Islamic realm extended from the Iberian Peninsula in the west to Central Asia and the Indian subcontinent in the east, shaping cultural, linguistic, legal and political institutions across a vast geographic area.
Early History
During the medieval era, when major political authority in the wider Middle East was concentrated in centres such as Damascus and Cairo, power within the Arabian Peninsula was held primarily by tribal confederations and semi-nomadic groups. Among the most powerful of these groups were the Hashemites, or Banu Hashim, a clan within the larger Quraish tribe that is descended directly from Prophet Muhammad. They came to control much of the eastern Hejaz region, playing a key role in the region’s religious and political life from the second millennium CE onwards.
In central Arabia, the Al Saud family, which today rules Saudi Arabia, has held intermittent control of the Nejd and other parts of central and eastern Arabia since the mid-1700s. In 1744 Muhammad ibn Saud, then-head of the Al Saud family, established an alliance with the imam Al Wahhab to unify the Arabian Peninsula under the banner of Islam. This marked the formation of the first Saudi state, with Diriyah as its capital. Its influence expanded across much of the peninsula until 1818, when Ottoman forces dismantled the state after prolonged conflict.
A second Saudi state rose soon after, this time centred in Riyadh. From the early 1820s to 1891, the Al Saud family re-established control over substantial parts of central Arabia. However, internal rivalries and tribal conflicts gradually eroded its stability. The collapse that followed forced Abdul Rahman bin Faisal Al Saud and his family, including his son Abdulaziz, into exile in Kuwait. Abdulaziz later returned, unified the Arabian Peninsula and founded modern-day Saudi Arabia in 1932, marking the beginning of the third Saudi state.
Modern Consolidation
In January 1902, at roughly 26 years of age, Abdulaziz Al Saud returned from exile and led a small contingent of followers in a successful effort to retake Riyadh. This marked the starting point of a gradual reassertion of Al Saud authority across central Arabia. Over the following decade, he consolidated influence in the Nejd, where his family retained long-standing alliances and by 1912 he had brought most of central and eastern Arabia under his rule. Over the next 20 years, Abdulaziz continued efforts to unify surrounding regions of the peninsula. In September 1932 he proclaimed the establishment of the Kingdom of Saudi Arabia and assumed the title of king.
A major turning point in the country’s development occurred in 1938, when Standard Oil of California discovered commercial quantities of oil in Dammam, located in the Eastern Province. The discovery revealed reserves that would later be recognised among the largest in the world, reshaping the trajectory of the young nation. By the mid-1950s, oil exports had become the main source of government revenue, underpinning large-scale government investment in infrastructure, public services and institution-building that drove Saudi Arabia’s economic and social transformation.
Demographics
At the time of the Kingdom’s establishment, the population was estimated at roughly 3m, with much of it composed of nomadic or semi-nomadic groups. Rapid economic transformation following the rise of the oil sector in the mid-20th century led to a significant demographic shift. Urbanisation accelerated sharply from the 1960s onwards and today Saudi Arabia is an overwhelmingly urban society. As of 2024 more than 85% of residents live in cities and metropolitan regions.
The most recent national census, released by the General Authority for Statistics (GaStat) in May 2023, recorded a population of 32.2m in 2022, up from 30.8m in 2021, representing sustained growth of around 35% since 2010. According to updated GaStat estimates issued in 2025, the population reached approximately 35.3m by end-2024, reflecting an annual increase of around 1.6m. Much of this recent growth was driven by non-Saudi residents, who accounted for more than three-quarters of the increase. By mid-2024, Saudis represented 55.6% of the population (around 19.6m), while non-Saudis accounted for 44.4% (around 15.7m).
Population density remains low nationwide at around 17 people per sq km, though this rises significantly in major urban centres. As of 2022, Riyadh Province – which is home to the capital and largest city – had approximately 8.6m residents, while Makkah Province – where the second-largest city of Jeddah and the holy city of Makkah are located – recorded just over 8m. The Eastern Province – with Dammam as its capital – had around 5.1m residents. Saudi Arabia has a notably young demographic profile. The median age is around 29, with roughly 60% of citizens under 30 and one-third under the age of 14, reflecting high fertility rates among Saudis compared to non-Saudis. Non-Saudi residents are predominantly of working age, aligning with labour market needs. The average life expectancy for Saudis is estimated at around 78 years.
Saudi Arabia hosts one of the world’s largest expatriate communities, with residents originating from South and South-east Asian countries, including Bangladesh, India, Pakistan, the Philippines and Yemen, as well as from Egypt and other countries. The Kingdom is home to a sizeable Western population, including nationals from Canada, the EU, the UK and the US. Most expatriates reside in major economic centres such as Riyadh, Jeddah and Dammam.
Labour Market
Labour market policy continues to prioritise increasing national participation in the private sector as part of broader diversification efforts. According to GaStat data for the first quarter of 2025, the overall unemployment rate fell to 2.8%, marking a historic low and reflecting a 0.7-percentage point decline year-on-year (y-o-y). Among Saudi nationals, unemployment stood at 6.3%, down 0.7 percentage points from the previous quarter. The total labour force participation rate, which includes Saudis and non-Saudis, reached 68.2% at the time, an increase of 1.8 percentage points from the previous quarter. Participation among nationals was 51.3%, while the employment-to-population ratio for Saudis rose to 48%, showing annual and quarterly gains.
Women’s participation continued to expand, with Saudi women’s labour force participation rising to 36.3% and the employment-to-population ratio increasing to 32.5%. Their unemployment rate declined to 10.5%, down 1.4 percentage points. Among Saudi men, labour force participation reached 66.4% and unemployment decreased to 4%. Survey findings indicate shifting employment preferences, with 94.8% of unemployed Saudi nationals stating willingness to work in the private sector. The majority also expressed readiness to work full time and commute longer distances, suggesting greater flexibility in job selection. Administrative records show that the number of Saudis registered with the General Organisation for Social Insurance and the Civil Service rose to 2.92m in the first quarter of 2025, up from 2.89m the previous quarter. Of these, 2.4m were employed in the private sector and nearly 493,000 in the public sector. Total registered workers, including expatriates, increased to 12.8m, compared to 12.4m in the fourth quarter of 2024, reflecting continued expansion in the labour market.
Language
The official language of the Kingdom is Arabic, of which Najdi and Hejazi are the two predominant dialects. The large expatriate population means that a number of other languages are also spoken, including Malay, Tagalog and Urdu. While Arabic is used for official and formal purposes, English is widely spoken by Western expatriates and in places of business. Most road signs in the country are written in both Arabic and English.
Religion
Saudi Arabia’s religious and cultural identity is grounded in its role as the birthplace of the Prophet Muhammad and as the guardian of Islam’s two holiest cities, Makkah and Al Madinah. The Saudi monarch holds the title of Custodian of the Two Holy Mosques, underscoring the central importance of religion in state authority and social life. The population is primarily Sunni Muslim, while Shia Muslim communities – particularly concentrated in the Eastern Province – represent a recognised minority. Religious interpretation associated with the 18th-century scholar Muhammad ibn Abd Al Wahhab has historically influenced religious practice and governance across the Kingdom since the establishment of the early Saudi states.
Religion is central to social, political and economic life, and under the Basic Law of Saudi Arabia, which was issued by King Fahd bin Abdulaziz Al Saud in 1992, the Quran serves as the basis for all the Kingdom’s laws, rules and regulations. Islam informs and defines all areas of life, including the legal system, public behaviour, marital relations, culture and the calendar. All Saudi nationals are required to abide by sharia law, which mandates daily public prayer and the paying of zakat. Zakat is a payment under Islamic law that is used for charitable or religious purposes. Likewise, daily prayers and fasting during the holy month of Ramadan are widely observed. In recent years, Saudi Arabia has moderated certain aspects of public religious practice as part of wider social and economic reforms, including expanded participation of women in education, the workforce and public life. These changes reflect a gradual social evolution that continues to uphold the Kingdom’s core Islamic identity and cultural heritage.
Pilgrimage remains a central expression of Saudi Arabia’s religious role. According to GaStat, more than 1.67m pilgrims performed Hajj in 2025, including approximately 877,800 men and 795,400 women. Looking ahead, national strategies target attracting more than 30m religious visitors annually by 2030. To enable this growth, the Kingdom continues to expand transport networks, accommodation capacity, digital services and crowd management systems, with the objective of improving safety, accessibility and the overall pilgrimage experience.
Economy
Saudi Arabia’s economy demonstrated renewed strength through 2024 and into 2025, underpinned by rising non-oil activity and the gradual recovery of oil output. GDP expanded by 1.3% in 2024, according to GaStat, supported by growth of 4.3% in the non-oil sector and a 2.6% rise in government activity, offsetting a 4.5% contraction in the Kingdom’s oil production. In the fourth quarter GDP grew 4.5% y-o-y, reflecting improving momentum despite subdued oil prices.
Growth prospects for 2025 have since strengthened. The IMF raised its forecast for Saudi Arabia’s real GDP growth to 4%, up from its earlier 3% estimate, while also projecting a similar 4% pace for 2026. A founding member of the Organisation of the Petroleum Exporting Countries (OPEC), Saudi Arabia continues to play a central role in balancing global oil markets, and thus, the faster-than-expected reversal of OPEC+ oil production cuts that caused the IMF to revise its forecasted growth for the Kingdom. The reversal of cuts stands to bolster the sector’s contribution to overall output. The Ministry of Finance’s latest projections are slightly more optimistic, anticipating 4.4% growth in 2025 and 4.6% in 2026, both led primarily by non-oil expansion. Data from the first half of 2025 highlight this trend: non-oil activity grew by 4.8%, accounting for more than 55% of GDP.
Furthermore, a flash estimate from GaStat for the third quarter of 2025 reinforced this positive trend, showing a y-o-y real GDP growth of 5%. By sector, oil activities expanded by 8.2%, non-oil activities by 4.5% and government services by 1.8%. On a quarterly basis, seasonally adjusted real GDP rose by 1.4%, driven by a 3.1% increase in oil output and modest gains in non-oil activity and government activity, which saw 0.6% and 0.7% growth, respectively. These results highlight a balanced recovery, with the oil sector driving growth while steady non-oil expansion underscores diversification progress and sustained investor confidence. The World Bank classifies Saudi Arabia as a high-income economy, while the IMF categorises it among major emerging markets. Based on the latest World Bank estimates, the Kingdom ranks as the world’s 19th-largest economy, with nominal GDP of approximately $1.3trn in 2025.
Vision 2030
Launched in April 2016 by Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud under the directive of King Salman bin Abdulaziz Al Saud, Vision 2030 remains the Kingdom’s overarching framework for economic diversification and national transformation. Conceived in the aftermath of the 2014-15 oil price collapse, it was developed by the Council of Economic and Development Affairs to reduce the country’s reliance on hydrocarbons and build a globally competitive, knowledge-based economy grounded in three pillars: a vibrant society, a thriving economy and an ambitious nation.
Implementation has progressed through a network of Vision Realisation Programmes translating strategic goals into measurable reforms across fiscal management, industrial development, human capital, housing and quality of life. A 2019 restructuring streamlined these programmes to 13 and reaffirmed the council’s central oversight. The National Industrial Development and Logistics Programme integrated policies for energy, mining, industry and logistics, while the Vision 2030 Delivery and Performance Authority was established to monitor targets and coordinate execution. Delivery now combines ministerial implementation with specialised project arms such as NEOM Company, Red Sea Global, Diriyah Gate Development Authority and ROSHN, marking a shift from design to delivery.
By late 2024, 1502 initiatives had been launched under Vision 2030, of which 674 – around 45% – were completed and an additional 40% were progressing on schedule. Around 93% of performance indicators were achieved, exceeded or close to interim targets, with several already surpassing their 2030 goals. Women’s labour-force participation rose to about 36%, exceeding the original 30% target. Tourism arrivals surpassed 100m in 2023 and reached 116m in 2024, including 30m foreign visitors, generating roughly SR284bn ($75.7bn) in revenue and contributing 4.7% of GDP. Eight Saudi sites are now inscribed on UNESCO’s World Heritage list, while Riyadh and Al Madinah joined UNESCO’s Creative Cities network in 2025, underscoring the growing emphasis on cultural diversification. Riyadh hosted more than 675 regional headquarters of global firms, volunteer participation surpassed 1.2m and Saudi Arabia ranked seventh worldwide in the UN e-Participation Index and sixth in the e-Government Development Index. Non-oil GDP grew by 4.3-4.5% in 2024, with non-oil revenue accounting for about 40% of government income and the non-oil private sector representing 51% of nominal GDP.
Environmental sustainability has also become a central policy priority. During its G20 presidency, Saudi Arabia introduced the Circular Carbon Economy (CCE) framework, built around the 4R approach – reduce, reuse, recycle and remove carbon emissions. The CCE National Programme, launched in 2021 and integrated into the Saudi Green Initiative, supports the Kingdom’s target of achieving net-zero emissions by 2060. Investment in renewable energy, carbon capture and storage, and large-scale land and marine restoration projects have expanded rapidly, positioning Saudi Arabia as a hydrocarbon producer pursuing decarbonisation in parallel with industrial diversification. The CCE framework reflects efforts to align climate commitments with a growth agenda, offering investors a clear model of how sustainability and economic transformation are being pursued.
Investment
Vision 2030 places foreign direct investment (FDI) at the core of its diversification and private sector development strategy, underscoring the Kingdom’s goal of becoming the GCC’s leading investment centre. Building on its stability and strategic geographic location, the country has advanced reforms to improve competitiveness, streamline regulations and open high-growth, non-oil sectors. The National Investment Strategy, launched in 2021, set clear objectives: attracting SR4trn ($1.1trn) in cumulative investment by 2030, raising the share of private sector GDP to 65%, increasing FDI’s contribution to 5.7% of GDP and boosting the share of non-oil exports from 16% to 50%.
In 2024 Saudi Arabia recorded SR119bn ($31.7bn) in FDI inflows, a 24% increase from 2023 – one of the highest levels in its recent history. This reflects growing investor confidence in the country’s transformation and aligns with Vision 2030’s drive to channel international capital into the renewable energy, manufacturing, digital infrastructure, logistics and tourism sectors. While the momentum is strong, the current level remains below the long-term target of approximately $100bn in annual FDI before 2030.
The Regional Headquarters Programme (RHQP), launched in 2021, is a central component of efforts to attract global investment and talent. By requiring multinational firms to base regional operations in Saudi Arabia to qualify for government contracts, the programme has accelerated corporate localisation and clustering. In the second quarter of 2025 alone, 34 new RHQP licences were issued, bringing the total to nearly 600 international companies since inception. The programme offers extensive incentives, including a 30-year corporate tax exemption, withholding tax relief and regulatory facilitation. Hosting regional headquarters for companies such as Siemens, Deloitte, PwC, Schlumberger, Bechtel, PepsiCo and Unilever, Riyadh has emerged as the region’s fastest-growing commercial centre. Saudi Arabia ranked third among emerging markets in the 2025 Kearney FDI Confidence Index and continues to perform strongly across indicators of business climate, entrepreneurship and digital infrastructure. The Shareek Programme, also launched in 2021, complements this agenda by deepening public and private collaboration. Its first wave of projects, announced in 2023, included $51bn in investment commitments from leading Saudi corporations such as the national oil company Aramco and national mining company Ma’aden. The initiative aims to mobilise $1.3trn in private sector investment, create hundreds of thousands of jobs and lift the private sector’s contribution to 65% of GDP by the end of the decade.
Oil Production
Saudi Arabia maintains an estimated spare oil production capacity of approximately 3m barrels per day (bpd), equivalent to 2.9% of global daily demand. While earlier expansion plans envisioned raising production capacity through 2027, Aramco, which oversees nearly all of the Kingdom’s oil and gas reserves and remains the world’s largest integrated oil producer, has since stated it can sustain a maximum capacity of 12m bpd without additional investment, reaffirming its status as the world’s key swing producer. In 2019, as part of diversification efforts, Saudi Arabia launched a partial initial public offering (IPO) of 5% of Aramco’s shares, raising $25.6bn, the largest IPO in history at the time. Aramco reported profit of SR604bn ($161.1bn) in 2022, which eased to SR454.8bn ($121.3bn) in 2023 and SR398.4bn ($106.2bn) in 2024 amid lower crude prices. The Kingdom led the landmark 2017 OPEC+ agreement that coordinated production cuts between OPEC and non-OPEC producers to stabilise prices – a role it reprised during the Covid-19 pandemic to counter severe market volatility.
Natural Gas
As of 2025, the country’s proven natural gas reserves stood at 229trn standard cu feet (scf) and 75bn barrels of condensate, bolstered by the 2024 discovery of the Jafurah gas field, estimated to contain an additional 15trn scf of gas and 2bn barrels of condensate. By September 2024, Saudi Arabia had achieved the world’s lowest gas flaring intensity – below 1% of total gas output – and targets eliminating routine flaring by 2030. In recent years, Aramco has announced five additional gas field discoveries across the Kingdom with a combined production potential of roughly 100m scf per day.
Natural gas expansion has become a strategic priority as the Kingdom seeks to reduce the volume of hydrocarbons used for domestic power generation and reaching net-zero emissions by 2060. Beyond power generation, gas serves as a cleaner feedstock for industrial processes and water desalination. The Jafurah field is also central to Saudi Arabia’s emerging hydrogen energy strategy, with the global hydrogen market projected to reach $700bn by 2050, positioning the Kingdom to become a major producer and exporter of low-carbon energy.
Governorates
Riyadh is located in the Nejd region, a rocky plateau that covers a large swathe of land in central Saudi Arabia. Jeddah, meanwhile, is located on the Red Sea coast and is bordered by the Sarawat Mountains to the east. At the administrative level, the Kingdom is organised into 13 provinces, including the Eastern Province – which is home to the bulk of Saudi Arabia’s oil reserves – Riyadh Province, Makkah Province and Al Madinah Province. Each province has its own capital and are further divided into between three and 20 governorates, with a total of 118 throughout the country. Each of the governorates is organised into sub-governorates for greater local oversight.
Government
Saudi Arabia is a monarchy ruled by the Al Saud family, descendants of the country’s founder, King Abdulaziz. In 2006 a law was introduced to formalise the royal succession process, stipulating that upon the death of the reigning monarch, a committee of King Abdulaziz’s male heirs convenes to name the crown prince as the new king. This framework ensured a smooth transition in 2015, when King Salman assumed the throne following the passing of his half-brother, King Abdullah. Traditionally, succession passed from brother to brother among King Abdulaziz’s sons, but the appointment of Crown Prince Mohammed bin Salman marked a historic shift towards father-to-son succession – only the second-such instance in the Kingdom’s history. Since ascending the throne, King Salman has restructured the government by replacing several councils with two key bodies: the Council for Political and Security Affairs and the Council for Economic and Development Affairs, both chaired by the crown prince.
Government Councils
The top government body in the Kingdom is the Council of Ministers, also known as the Cabinet, which is led by the ruler and consists of 30 royally appointed ministers serving four-year terms. The government’s relationship with its citizens, and its responsibilities towards them, is codified by the Basic Law, which was passed by King Fahd in 1992. The Majlis Ash-Shura, or Consultative Council, has an advisory role in the government and is made up of 150 members and a speaker across 13 committees, all of whom are appointed by the king. However, the organisation has limited powers and cannot pass or enforce laws. The Consultative Council broadly serves as a forum for policy debates and it can interpret existing laws and propose new legislation to be passed by the ruler.
The council advises the king on a variety of issues, including the annual budget and long-term economic development plans. The Consultative Council also has the power to call ministers in for questioning. Approximately 70% of the members of the current council hold PhDs, many of which were granted from UK and US universities. Women hold 30 seats, making up one-fifth of the Consultative Council’s membership. While the body is primarily an advisory group, it has gained a substantial number of new powers over the past decade. For example, its mandate now includes participating in the Kingdom’s complex budgeting process, which was considered to be a significant increase in the council’s responsibilities.
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