Saudi Arabia Shaking Off Oil-Dependency Reputation
Saudi Arabia has been diverting its attention to non-oil activities to build a more sustainable economy.
Non-Oil Sector on a Roll
Aiming to establish a modernized, more sustainable and less oil-dependent economy, KSA focused on diversifying the economy, given that it is a key condition to this aspired economy.
The non-oil Saudi economy is expected to grow by 6% this year, said the Saudi Minister of Finance Mohammed Al-Jadaan. During his speech on the second day of the Future Investment Initiative, Al-Jadaan said that the non-oil sector in Saudi Arabia is still growing significantly.
In 2023, non-oil revenues increased by 13% to reach SAR 135.1 billion during the second quarter, up from SAR120.0 billion during the same period last year.
The results of the country’s budget for the second quarter show that non-oil revenues contribute to the general budget revenues by 43%; KSA aims to push it to 50% by 2030.
Poor countries are feeling the pinch
In light of the recent conflict in the Middle East and its economic consequences, Al-Jaddan said that the low-income countries are the ones bearing the consequences of the current risks the most.
“Protective measures and trade constraints among countries amplifies poor and low-income countries,” said the minister, adding that there is a direct correlation between trade constraints and poverty rates.
He explained that trade and imports constraints will affect inflation and there are low-income countries that have to pay 10% interests, yet at the same time they are expected to have high growth rates.
Non-oil trend Resurrect dusty sectors
Hence, the non-oil sector in Saudi Arabia has achieved great progress in recent years, as it enhanced progress in sectors like trade, industry, infrastructure, tourism, technology, education, scientific research, sports and entertainment.
For a long time, travelling to Saudi Arabia only meant pilgrimage, however, the Kingdom has been revealing all its hidden gems to the world, proving that KSA has more than just the Kaaba.
Besides tourism, sports sector in KSA has been blessed with renowned athletes and opportunities to host different events like the Arab Games.
Moody and IMF’s Take on Saudi Arabia’s Economy
Backed by projects implementation, oil prices and possible rise in private sector investments, the non-oil sector will grow significantly during the coming years, as per Moody’s.
“The positive outlook reflects the increasing likelihood that, through reforms and investment in various non-oil sectors, the sovereign’s economic and fiscal reliance on hydrocarbons will, over time, materially decline,” reported Moody’s.
The International Monetary Fund (IMF) projected an 0.8% growth in 2023 compared to its projections of 1.9% last July.
In its Global Economic Outlook, the IMF pushed its projections regarding the Saudi Economy Growth to 4% in 2024 compared to its previous projections of 2.8%.
This Diversification is coming at a price
According to the 2023 general budget report for the second quarter, expenditure rose to 9% compared to the same time last year. This is attributed to an increase in operating expenditure by 8% and capital expenditure by 21% driven by the government’s keenness to implement programs, projects and strategies that support diversifying the economy.
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