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Saudi Arabia reaches major milestone in diversifying economy away from reliance on oil

Byeditor

Apr 2, 2024

Saudi Arabia reached a significant milestone last year as the non-oil sector contributed 50% to the country’s GDP for the first time. This marked a key moment in the nation’s efforts to reduce its dependence on fossil fuels and diversify its economy.

Government data revealed that the real GDP growth rate for non-oil activities was around 4.4%, totaling approximately 1.7 trillion Saudi riyals (about $453 billion). These figures aligned with the goals outlined in Vision 2030, a comprehensive program of policies and reforms that emphasizes economic diversification as a core objective.

Economist Nasser Saidi pointed out that the oil and gas sector is capital-intensive and does not generate sufficient job opportunities for the country’s young and educated population, with around 30% of Saudis being under the age of 30. To address this issue, the government has implemented incentives to boost services and manufacturing industries.

Last year, the growth of the non-oil sector was largely driven by private consumption in entertainment, hospitality, and tourism. These areas accounted for 40% of economic activity in Saudi Arabia. The tourism sector, in particular, saw significant growth, attracting $13 billion in private investments and welcoming millions of foreign and domestic visitors.

Despite these achievements, Saudi Arabia experienced a 4.3% decline in real GDP in 2023, primarily due to reduced activity in the oil sector caused by voluntary production cuts by OPEC countries. Mining and quarrying sectors contributed significantly to non-oil output, while manufacturing, real estate, and construction also played key roles in the country’s economy.

By editor

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