Question

Q3. Has Saudi Arabia changed in terms of type of economy in the last 10 years? How?

100 words each answer but please do not answer in professional way.

Answer 1

Saudi Arabia has kept more than 1.5-2 million barrels per day of market management spare capacity on hand. Current oil production in the Kingdom is at 10.3 million barrels per day, including 7.15 barrels for export and 3.15 for local demand. Nevertheless, domestic consumption is growing .

Actual government spending in 2015 exceeded SR 975 billion ($260 billion), marking a 13 per cent rise in projected spending, and reporting an SR 367 billion ($98 billion) deficit. The rise in spending was mainly due to higher wages for Saudi civilian and military staff, social security beneficiaries and retirees

Saudi 's rapid depletion of foreign-exchange funds is very troubling. The Kingdom's central bank reserves have fallen from $732 billion in less than 12 months to $623 billion in 2015. Based on current spending and deficit rates and assuming budgetary goals remain static, the oil market conditions remain unchanged and global tensions do not escalate, their reserves give them a fiscal buffer of at best five years

Although this may be seen by local consumers as a major price increase, the increases are still relatively small compared to international markets. This small price increase, repeated in the GCC, is perceived more as an austerity package alongside tax increases than strict adherence to the recommendations of the International Monetary Fund. The effect of these initiatives has yet to be explicitly checked and measured in terms of local acceptance, but as long as the local cost of goods and services remains steady, job creation rises for local people in the public sector and welfare benefits remain as they are, KSA citizens are unlikely to bring pressure on the government.

A rapid fall in oil prices, energy costs and military spending, including the war in Yemen and support for rebels in Syria, are all factors that will continue to affect the financial situation of the Kingdom. Nevertheless, the nation's "mother of all problems" is not a rising budget deficit, global extremism, and sectarian tensions, but the increasing and persistent youth unemployment that continues to threaten the national security of Saudi Arabia. Saudi Arabia needs to step up collaboration between the public and private sectors to absorb millions of unemployed youth and avoid sending them into the pit of extremism or civil unrest.

To survive the Kingdom's centennial anniversary, it will adapt to an evolving modern Middle East where global politics and social order have radically changed in the past decade. In addition , the government should look at skill-based education system, job development approaches that tackle the dynamic private sector, a merit-based approach to the welfare system and a gradual departure from the retirement model are sure ways of safeguarding the future of the Country.