Reviving economic relations between Iran and Saudi Arabia

In the near future, there are plans to enhance economic relations between Iran and Saudi Arabia through various programs. One of these programs is the expansion of Iran’s export market to Saudi Arabia in areas such as agriculture, food, minerals, metals, and industrial equipment.

Among the Persian Gulf Cooperation Council countries, Saudi Arabia has the highest amount of oil reserves. This country also holds the third position in terms of valuable natural resources globally and is the 17th largest economy in the world. Its GDP stands at 1.1 trillion dollars, and it experienced an economic growth of 7.8% in 2022.

Kingdom of Saudi Arabia’s Vision for 2030

Mohammed bin Salman launched Vision 2030 on April 25, 2016, as a strategic plan to achieve three intertwined goals: diversifying the Saudi economy away from oil, modernizing the society with cultural traditions, and enhancing the Kingdom’s global profile. Significant progress has been made in all areas as Vision 2030 approaches its halfway mark of implementation. Vision 2030 was launched under these compelling circumstances, to ensure Saudi Arabia’s status as the heart of the Arab and Islamic worlds; its determination to become a global investment powerhouse; and transform its unique strategic location into a global hub connecting three continents, Asia, Europe, and Africa.

Bin Salman’s message outlines three strategic pillars that support the goals of building a vibrant society, a thriving economy, and an ambitious nation. These pillars are being achieved through 11 Vision Realization Programs, each with specific targets to be met during five-year National Transformation Programs leading up to 2030. The first pillar, which has driven the social reformation process, sought to increase household spending on cultural and entertainment activities from 2.9 percent to 6 percent and raise the Saudi ranking from 26 to 10 in the world’s Social Capital index. The second pillar of the plan aims to steer the economy away from relying solely on oil. Its goals include reducing unemployment from 11.6 percent to 7 percent, increasing the non-oil exports’ share in the non-oil gross domestic product from 16 percent to 50 percent, raising the private sector’s contribution from 40 percent to 65 percent of GDP, and boosting foreign direct investment from 3.8 percent to 5.7 percent of GDP. The third pillar, meant to enhance governmental efficiency and national competitiveness.

Saudi Arabia Trading Partners

According to official statistics, Saudi Arabia exported around 378 billion dollars and imported 140 billion dollars in 2022. China has become Saudi Arabia’s largest import partner, with its share in the Saudi import market doubling from 14% to 27% in the past five years. The US and India are important trading partners for Saudi Arabia, accounting for over 15% of its imports.

Saudi Arabia and Iran trade in the past years

In the last few years Iran and Saudi Arabia have not been each other’s primary trading partners. The trade exchange between two countries during the peak of economic relations was about 800 million dollars, of which 500 million dollars were imported from Saudi Arabia and 300 million dollars were exported to this country.

The future of trade between Iran and Saudi Arabia

In the near future, there are plans to enhance economic relations between Iran and Saudi Arabia through various programs. One of these programs is the expansion of Iran’s export market to Saudi Arabia in areas such as agriculture, food, minerals, metals, and industrial equipment. And since Saudi Arabia seeks to develop its industrial and technological infrastructure, it seems that the importance of oil for this country has faded and Iranian traders and manufacturers can use this opportunity to enter the Saudi market. Furthermore, collaborating on investment ventures such as renewable energy initiatives, technological research and development, and logistics-related productivity are common interests shared by both countries. For instance, Iran’s connection to Africa via Saudi Arabia provides a chance to enhance economic interactions between the nations.