From the high-powered corridors of global commerce to the intricate metrics of financial indicators, Saudi’s economy has been making headlines for many reasons.
Moreover, it has been a matter of great interest for many and the topic of conversation for economists, analysts, and policymakers all over the world.
Inside the Saudi economy
Efforts towards diversification
Launched in 2016, Saudi Vision 2030 aims to reduce the nation’s oil reliance and diversify its economy. Consequently, the strategy gives priority to developing sectors like health, education, infrastructure, recreation, and tourism. This bold endeavor has already initiated significant changes, and more are anticipated.
In fact, the diversification of the Saudi economy has begun to yield results, particularly through a substantial increase in export capacity and in the non-oil export sector. The value of goods and services exporting has climbed significantly, indicating greater integration with international markets.
The surge in non-oil exports also stands crucial. Data from the Ministry of Finance shows a 53 percent rise in non-oil revenues in the third quarter compared to the same quarter in 2022. Consequently, this increment reached a total of $29.72 bn.
Significantly, the share of non-oil revenues in Saudi’s total revenues saw an increase in this period. It covered 43 percent of the total, up considerably from last year’s 24 percent. Simultaneously, oil revenues, traditionally the primary income source, decreased from 76 percent to 57 percent between 2022’s third quarter and this year’s. This highlights the active economic shift that Vision 2030 has kickstarted.
Furthermore, the country remains a preferred investment destination owing to its political stability, world-class infrastructure, and strategic geographic location. What is more, ongoing economic reforms are currently aiming to further enhance the business environment. These initiatives, coupled with private sector involvement, have cultivated a positive investment climate in the country.
Role of the private sector
According to the Federation of Saudi Chambers, the private sector contributed 41 percent of the gross domestic product (GDP), equaling $440 bn. In addition, the number of workers in the private sector has increased from 8.084 mn in 2021 to 9.422 mn in 2022, with a growth rate of 16.6 percent.
The ongoing endeavor to localize the labor force largely contributes to these increases, paving the way for a larger influx of Saudis into the private sector. In particular, the number of Saudis contributing to the sector grew from 1.910 mn in 2021 to 2.195 mn in 2022. This growth is significant, marked at 14.9 percent.
Progress and projections
The Saudi economy continues to demonstrate considerable global influence. To start with, it was disclosed to have raked in a total revenue of $68.92 bn during the third quarter of 2023. The Ministry of Finance reported this in its quarterly budget performance report.
Moreover, the Saudi economy achieved a growth rate of 8.7 percent, the highest among the Group of Twenty (G20) members. In fact, the International Monetary Fund recognized Saudi as the fastest-growing economy among the G20 members in 2022.
Fueling this growth were Saudi’s formidable production capabilities and substantial investments. Above that, the self-sufficiency rate, another significant driver, blossomed to 81.2 percent. Additionally, the country’s investment rate, the proportion of output invested, provided an additional thrust by leaping to 27.3 percent.
In addition, the nation’s GDP crossed the trillion-dollar mark, reaching this maturity stage sooner than the initial target of 2025. However, this milestone signifies more than just numbers. Likewise, it hints that the Saudi economy has the potential and is poised to remain formidable through 2026.
As we look ahead, the Saudi economy is projected to maintain its upward trajectory. Global reports recognize its potential, pointing towards its growth in terms of global competitiveness, among others.
In sum, the Saudi economy is on a firm footing, showing promising signs of maintaining even its trillion-dollar status through 2026 and beyond.
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