Saudi Arabia's economy is petroleum-based; roughly 75% of budget revenues and 90% of export earnings come from the oil industry. The oil industry comprises about 45% of Saudi Arabia's gross domestic product, compared with 40% from the private sector (see below). Saudi Arabia officially has about 260 billion barrels (4.1×1010 m3) of oil reserves, comprising about 24% of the world's proven total petroleum reserves.
The government is attempting to promote growth in the private sector by privatizing industries such as power and telecom. Saudi Arabia announced plans to begin privatizing the electricity companies in 1999, which followed the ongoing privatization of the telecommunications company. Shortages of water and rapid population growth may constrain government efforts to increase self-sufficiency in agricultural products.
In the 1990s, Saudi Arabia experienced a significant contraction of oil revenues combined with a high rate of population growth. Per capita income fell from a high of $11,700 at the height of the oil boom in 1981 to $6,300 in 1998.[24] Recent[when?] oil price increases have helped boost per capita GDP to $17,000 in 2007 dollars, or about $7,400 adjusted for inflation.
Recent oil price increases have triggered a second oil boom, pushing Saudi Arabia's budget surplus to $28 billion (110SR billion) in 2005. Tadawul (the Saudi stock market index) finished 2004 with a massive 76.23% to close at 4437.58 points. Market capitalization was up 110.14% from a year earlier to stand at $157.3 billion (589.93SR billion), which makes it the biggest stock market in the Middle East.
OPEC (the Organization of Oil Exporting Countries) limits its members' oil production based on their "proven reserves." The higher their reserves, the more OPEC allows them to produce.[citation needed] Saudi Arabia's published reserves have shown little change since 1980, with the main exception being an increase of about 100 billion barrels (1.6×1010 m3) between 1987 and 1988.Matthew Simmons has suggested that Saudi Arabia is greatly exaggerating its reserves and may soon show production declines (see peak oil). To diversify the economy, Saudi Arabia launched a new city on the western coast with investments exceeding $26.6 billion. The city, which is named "King Abdullah Economic City", will be built near al-Rabegh industrial city north to Jeddah. The new city, where construction work started in December 2005, includes a port which is the largest port of the kingdom. Extending along a coastline of 35 km, the city will also include petrochemical, pharmaceutical, tourism, finance and education and research areas. Saudi Arabia officially became a World Trade Organization member in December 2005.
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