Ten years ago, private bankers and overseas executives who had business meetings in Saudi Arabia would plan their itinerary in such a way that they would spend the minimum possible time in the Kingdom, allocating the better part of their Gulf tour to the more fashionable and cosmopolitan Dubai, which served as their base station. Today, the same executives, if they are still left in business, would like to spend as much time in the Kingdom as they can, exploring the huge opportunities that the Saudi market holds out, although a stay in Dubai continues to be as glamorous as ever.

In fact, Saudi Arabia is now the toast of every business gathering that has a focus on the Middle East. Report after report is putting the Kingdom in the top slot in terms of growth potential, business confidence, domestic demand, favourable demographics, retail dynamics, infrastructure development, construction boom, and imaginably every activity that has a bearing on economic progress. The Kingdom is being increasingly looked at as a potential game changer.

Rating agencies, including Standard & Poor’s, are quite impressed with Saudi Arabia’s strong external and fiscal positions and prudent macroeconomic management. They haven’t failed to acknowledge how the country is riding an oil boom wave from a position of strength, consolidating its economic policies, building up a buffer zone to adverse shocks, and creating fiscal space to address socio-economic needs.

Saudi Arabia clearly leads Middle East’s infrastructure development spending for years to come and probably for a decade ahead. The numbers mentioned in this regard are mindboggling: $400 billion (Dh1.47 trillion) already committed to infrastructure; $100 billion in transport and logistics; $120 billion for the development of King Abdullah Economic City alone; another $500 billion in energy, logistics and education by 2020; $130 billion for mass housing and social welfare projects.

The Kingdom has also been projected as the largest and one of the fastest growing retail markets in the Mena region, continuing to attract strong interest from retail brands from across a range of categories as they respond to the many opportunities, driven by a young population.

Advantage foreign investors

Saudi Arabia has slowly been opening up its economy to allow more foreign players to come, with a gradual easing of licensing and related regulations, and this in turn has encouraged foreign investors to tap into the huge opportunities provided by an unprecedented economic boom. The UAE companies, in particular, have been making a beeline for an entry into the Kingdom either as joint venture partners or as independent entities.

The construction boom has also drawn in a large number of Chinese companies as China has been upgrading its commercial and diplomatic relationship with Saudi Arabia as part of a long-haul strategic initiative, which is expected to see Beijing take a more active interest in the Kingdom and its neighbourhood. Saudi Arabia is already China’s largest trade partner in the region, surpassing the UAE, while China had temporarily replaced the United States as its biggest export market for oil. Currently, China is reported to account for over 16 per cent of Saudi Arabia’s petroleum exports while over 18 per cent of Saudi Arabia’s all imports are from China. The increasing Sino-Saudi oil relationship is expected to make up for a consistently falling offtake of Saudi oil by the United States.

Saudi Arabia’s contribution to global financial stability is finding it increasing recognition on the international arena; so is the positive spillover of its higher growth and public spending to the region as a whole. The Kingdom also helped stabilise the global oil markets by raising oil production and committed $15 billion in additional resources for the International Monetary Fund (IMF) in its plans to promote global stability.

There have, however, been a few jarring notes in the otherwise perfect tune that the Saudis have been playing, with the IMF itself warning that the country may be overspending its fiscal resources in a way that could affect the equitable distribution of oil wealth for the future generations.

But one thing is loud and clear: the force of the Saudi developmental effort on the ground is simply overwhelming.

— The writer is a UAE-based journalist