Saudi Arabia’s Harvest 2023: National Economy Overcomes Global Challenges

The Saudi economy has managed to overcome the global challenges faced by the world in 2023, including rising inflation rates and the adoption of monetary tightening policies by reducing interest rates.

It achieved a growth of 3.1% during the current year, which is about to end, exceeding the average growth in the Middle East and North Africa region.

Reasons for Success of Saudi Economy

The strong growth of the Saudi economy in 2023, and its overcoming of global challenges, is attributed to several reasons, the foremost of which are:

Firstly, Economic Diversification: In recent years, the Saudi economy has shifted towards economic diversification, significantly contributing to reducing dependence on oil. This diversity has helped lessen the impact of changing oil prices on the Saudi economy.

Secondly, Economic Reforms: Economic reforms undertaken by the Saudi government in recent years have contributed to boosting economic growth. Moreover, these reforms have improved the business environment and attracted direct foreign investment.

Key Economic Sectors

The Oil Sector: Initially, the oil sector contributed 1.9% to the growth of the Saudi economy in 2023. Notably, the rise in oil prices played a significant role in achieving this growth. Meanwhile, the non-oil sector contributed 4.2% to the economy’s growth in 2023, where economic diversification played a key role in this achievement.

Wise Leadership

Furthermore, The Saudi government’s wise leadership significantly contributed to the economy’s success in 2023. It overcomes global challenges through proactive measures like capping petroleum derivative prices and bolstering the private sector.

Most prominent proactive measures taken by Saudi government in 2023 include:

Notably, in June 2023, Saudi Arabia capped prices of petroleum derivatives like gasoline and diesel, effectively curbing goods and services inflation. Subsequently, in July 2023, the government boosted social welfare, increasing cash support for various beneficiaries, thus safeguarding purchasing power.

Furthermore, the government launched initiatives in 2023, such as “Partner” and “Invest in Saudi Arabia,” to boost the private sector.  Additionally, Saudi Arabia’s recent shift towards economic diversification has reduced its oil dependence.

Main non-oil economic sectors in the Kingdom of Saudi Arabia include:

Trade: Trade plays a major role in the Saudi economy, representing about 20% of the gross domestic product. Saudi foreign trade recorded strong growth in 2023; exports increased by 15% and imports by 12%.

Industry: Industry includes a variety of sectors, including manufacturing, petrochemicals, and mining. The Saudi industry recorded strong growth in 2023 and the value of industrial production rose by 10%.

Real Estate: The Saudi real estate sector is recording increasing growth, attracting more local and foreign investments. Real estate prices in Saudi Arabia rose in 2023 and residential apartment prices increased by 15%.

Tourism: The Kingdom of Saudi Arabia has significant tourism potential, with many historical, cultural, and religious sites. The Saudi tourism sector recorded strong growth in 2023. The number of tourists coming to Saudi Arabia rose by 20%.

Services: Services include a variety of sectors, including financial services, logistics, and healthcare. Saudi services experienced strong growth in 2023 and the value of the gross domestic product of services increased by 12%.

These sectors can be divided into two main categories:

Transformative Economic Sectors: Sectors that produce new goods and services by transforming raw materials, including trade, industry, and real estate.

Non-Transformative Economic Sectors: Sectors that provide services to individuals and companies, including financial, logistical, and healthcare services.

Other Economic Areas

The Kingdom of Saudi Arabia has also excelled in many other economic areas, such as:

Renewable Energy

Saudi Arabia possesses significant potential in the field of renewable energy and aims to generate 50% of its electricity needs from renewable energy sources by 2030. Consequently, the Kingdom made significant progress in this field in 2023, announcing several new projects in renewable energy.

Artificial Intelligence

Furthermore, Saudi Arabia is heavily investing in the field of artificial intelligence to become a regional leader in this area. Accordingly, the Kingdom witnessed substantial progress in AI in 2023, launching numerous initiatives and programs in the field of artificial intelligence.

 Green Saudi Economy

Green Saudi economy aims to achieve a sustainable economy and is committed to reducing carbon emissions by 27.2% by 2030. The Kingdom made significant progress in this area in 2023, launching various initiatives in the field of the green economy.

Also, Saudi Arabia has made significant progress in many economic fields in 2023.This will enhance its status as a global economic power.

Future Outlook

The Saudi economy will continue to record significant growth in the coming years. The economic growth is expected to reach 7.4% in 2024. This is attributed to the continued implementation of economic reforms and increasing attractiveness of the Saudi economy for foreign investments.

 

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