Saudi rulers’ vision standing out as an example of
successful economic diversification
Amid the current backdrop of worldwide economic uncertainty,
Saudi Arabia is standing out as a shining example of successful economic
diversification. Fueled by the rapid implementation of its Vision 2030
strategies and unwavering political commitment, the country's efforts are
yielding positive results even in the face of concerns about inflation and
geopolitical tensions.
The most recent report from the International Monetary Fund
(IMF) forecasts a slowdown in global economic growth, dropping from 3.4 percent
in the previous year to 2.8 percent in 2023, with an anticipated increase of 3
percent in the following year. This dim global economic projection arises from
a mix of factors, including the need for stringent policies to counter
inflation, ongoing conflicts like the one in Ukraine, the emergence of geo-economic
fragmentation, and vulnerabilities in the nonbank financial sector.
In stark contrast to this gloomy global outlook, Saudi
Arabia and several Gulf Cooperation Council (GCC) nations, particularly Saudi
Arabia, are experiencing a surge in economic activities and optimism.
Economic Diversification Index
Even amidst market turbulence, Nasser Saidi &
Associates, an economic and business advisory consultancy, has revealed a
positive trend in Economic Diversification Index scores from 2000 to 2019 in
countries such as China, the US, Saudi Arabia, Germany, and Oman. Among GCC
nations, except for Bahrain, remarkable progress in EDI scores has been
observed during this period.
Evident Tangible Outcomes
Saudi Arabia's ongoing diversification efforts are yielding
concrete outcomes in various sectors. Tourism, media, hospitality,
entertainment, mining, metals, finance, and the digital realm, including
advancements in fintech, AI, and clean energy, have witnessed significant
growth. This evolution is particularly noteworthy considering that Saudi
Arabia's journey began from a relatively modest economic base.
The IMF also highlights the substantial expansion of Saudi
Arabia's non-oil gross domestic product (GDP), which reached 4.8 percent in
2022. This growth has been driven by robust private consumption, non-oil
private investment, and large-scale projects. The IMF predicts that non-oil
growth will exceed 5 percent in the first half of 2023.
Guided by Vision 2030
The success of Saudi Arabia's diversification can be
attributed to a unified, comprehensive governmental approach guided by the
ambitious Vision 2030 agenda. Launched in 2016, Vision 2030 has led to various
economic and social reforms, including increased women's employment, the
development of new economic sectors, and reduced energy subsidies.
The Road Ahead
As Saudi Arabia progresses toward realizing its Vision 2030
goals, the nation is expected to emerge as a regional economic and
technological hub, playing an increasingly significant role in global markets.
While Saudi Arabia's diversification efforts have yielded significant
benefits, oil remains a dominant contributor to its export and fiscal revenue,
accounting for over 40 percent of GDP. To sustain the trajectory of successful
diversification, the country is investing in sectors such as mining, metals,
hospitality, and tourism. Additionally, the introduction of revenue-enhancing
measures, such as higher-value-added tax rates and targeted taxes on specific
goods and services, is contributing to more stable government revenues.
The expansion of economic diversification also has potential
in the clean energy sector, aligning with the country's goal of achieving
net-zero emissions by 2060. Saudi Arabia's comparative advantage in solar power
could position it as a new energy powerhouse, with the capacity to export clean
electricity and hydrogen, bolstering its economic resilience and influence on
the global stage.
Source: Arab News
0 Comments