New data illustrates Saudi Arabia’s strong international investment position

July 26, 2012

Recently released data on the Kingdom’s total foreign assets and liabilities have demonstrated the strength of Saudi Arabia’s international investment position, according to a report in the June issue of Saudi Commerce and Economic Review. For the first time, information on the foreign investments of all components of the Saudi economy, including government entities, companies and individuals, has been published. According to the data, the Kingdom’s combined foreign assets stood at $707 billion at the end of 2010, while Saudi entities and individuals owed foreigners $213 billion.

A country’s international investment position is an important indicator of its economic health, signaling its abilities to repay debts, absorb external shocks and support its exchange rate. With total net foreign assets of $494 billion, equal to 110 percent of Gross Domestic Product (GDP), Saudi Arabia has the fifth strongest international investment position of the forty-two countries for which data was available. Only Hong Kong, Singapore, Taiwan and Switzerland had higher net positions, while Greece, Spain, Ireland and Portugal possessed the largest shortfall of foreign assets versus liabilities.

In the four years for which the Saudi Arabian Monetary Agency (SAMA) has released data (2007-2010), Saudi Arabia’s net investment position has risen from $375 billion to $494 billion. While direct investment by Saudi companies abroad grew by 56 percent from 2008-2010, the amount of investment by foreign companies in the Kingdom remains much greater. Improvements in Saudi Arabia’s business environment and a decline in the relative attractiveness of other investment destinations have led to a surge of foreign direct investment in the Kingdom, increasing by 132 percent from 2008-2010.