Saudi Arabia is making steady progress in diversifying its economy despite facing global challenges. The country’s Vision 2030 is designed to reduce its reliance on oil. Although interest rates, trade policies, and geopolitical issues create uncertainty, Saudi Arabia remains focused on its economic reforms.
In March 2024, S&P Global upgraded Saudi Arabia’s long-term sovereign credit rating from “A” to “A+.” This reflects the significant growth in the country’s non-oil sector and the development of local capital markets. The Vision 2030 plan has been key to the growth in tourism, industry, and technology.
In 2024, Saudi Arabia’s economy grew by 1.3%. The fourth quarter saw a sharp increase of 4.4%, the highest in two years. This growth was mainly due to a 4.3% rise in non-oil activities, showcasing the success of diversification efforts.
Saudi Arabia’s approach to economic diversification involves several key strategies. Tim Cullen, a former IMF official, discussed the multi-pronged approach during a seminar by the Saudi Economic Association. Reforms in financial markets, the introduction of tourist visas, and legal system improvements are part of this strategy. The implementation of VAT and energy price hikes also play an important role.
Additionally, the government is investing heavily in infrastructure. Airports, ports, railways, metro systems, and digital infrastructure are being upgraded. Major government projects like Neom and Qiddiya will further boost the economy. These projects attract foreign direct investment, stimulate competition, and raise corporate profits.
Dr. Abdullah Almeer, an economics professor at King Fahd University, emphasized that these large-scale projects are accelerating economic transformation. He pointed out that Saudi Arabia has used similar strategies in the past to develop sectors like petrochemicals.
Economic diversification helps reduce dependence on oil, which is crucial for Saudi Arabia, given the volatility of global oil prices. This strategy also expands the country’s exports, production, government revenues, and employment opportunities.
