Saudi Arabia's Economic Odyssey: Ascending to the Global Top 15

Saudi Arabia boasts a robust economy fueled primarily by oil exports, which have historically shaped its growth trajectory. With approximately 11% of the world's oil production, Saudi Arabia ranks 2nd to the US as the largest global oil provider. Even amidst the challenging economic conditions and obstacles faced worldwide, the country's economy experienced an impressive growth rate of 8.7% in its gross domestic product (GDP) in 2022 (the highest among the G20 nations). This is because high oil prices abetted the GDP throughout the year. Notably, non-oil activities grew by 5.4%, while government services witnessed a growth of 2.6% (vs. an increase of 15.4% in crude oil and natural gas activities). The Kingdom embarked on its journey for economic diversification and a sustainable future in 2016 through the Vision 2030 program.

The program is currently in the second phase of execution. The goals are threefold: to liberalize social norms and improve government services, diversify the economy away from hydrocarbons, and increase job creation and foreign investments by expanding the participation of the non-oil private sector. To achieve the objectives of Vision 2030, the government has allocated significant resources to six major projects worth $7.0 trillion, aimed at diversifying the economy and attracting foreign investment. Additionally, the government has directed a portion of the oil revenue towards replenishing foreign exchange reserves. The government on the other hand also facilitated increased off-budget spending on Vision 2030 projects through the Public Investment Fund (PIF), the country's sovereign wealth fund.

Notable progress has been observed in certain areas, including the participation of women in the workforce, which has surpassed the original 2030 target of 30% in 2022 itself (stands at ~35%). The renewable energy sector has seen expansion through projects such as the Sakaka plant, while the oil and gas sectors initiated working on increasing the gas production capacity. Industrial cities such as Ras al-Khair and Waad Al-Shamal have been enhanced to develop the mining sector. The investment of $51 billion under 'Shareek' program is likely to generate investment opportunities for private companies, accelerate planned projects, and identify new partnerships for eligible companies. Further, the Kingdom is working towards developing tourist sites, facilitating procedures for issuing visitor visas, and promoting growth through the Tourism Development Fund.

The country's efforts to diversify its economy beyond oil are laudable and demonstrate a long-term commitment to economic growth and stability as it has prioritized the type of investment in non-oil industries such as tourism, hospitality, aviation, logistics, advanced manufacturing, and technology. The proactiveness of the government and the associated stakeholders indicates that the country is well-positioned to effectively manage any shortfalls in the challenging areas until it materializes its ambitious long-term development goals. There is a close possibility that the Kingdom will achieve its set targets even before 2030. It will be interesting to witness the country moving up the ladder to become the top 15th economy in the world. Therefore, it will not be too optimistic to say that the investment climate in Saudi Arabia has never been better, and setting up a business is becoming more efficient than ever before.