Saudi Arabia’s drive towards achieving economic resilience is mainly centered around increasing the non-oil economy and promoting private sector-led investments. The growth witnessed on these two fronts is a strong indicator that the country’s pro-growth plans are taking effect as it continues to nurture the creation of a diversified, diverse economy that does not rely on a single resource.
With a vibrant private sector, strong infrastructure, and a strategic location, the Kingdom continues to be an enticing destination for international businesses and leaves a significant mark on the global investment landscape, aligning with national priorities in developing non-oil sectors such as tourism and entertainment as part of its ongoing economic and social reforms.
Powering the Growth of the Non-Oil Economy in Action
Towards the end of last year, non-oil revenues hit 50% of the country’s GDP, marking a significant stride in the Kingdom’s pivot towards sustainable development and a critical step in its aim to restructure its economic dynamics. The momentum continues this year, with non-oil revenues rising by 9% to reach SR111.51 billion ($29.73 billion) in the first quarter of 2024 relative to the same period in 2023.
The sustained rise in non-revenues underscores a critical juncture and a steadfast commitment to shift away from concentrating its resources and manpower in one single sector and making non-oil sectors attractive propositions for private capital inflows.
This strategic approach prioritizes enhanced trade relations, which are closely linked with increasing private-sector-led economic growth, as envisaged in the Kingdom’s Vision 2030 roadmap. As a result, the Kingdom looks to expand connectivity with global markets to increase direct foreign investments and foster trade partnerships, thus cementing its position as a premier global logistics hub.
Consequently, the Kingdom experienced an increase in cross-border trade, which is a critical element in fostering international trade and foreign investments. This was further supported by the rise in taxes collected from international trade and transactions, which increased by 10% in the first quarter of this year to reach SR6.03 billion as compared to Q1 of the preceding year.
The business scene in the Kingdom continues to witness transformative changes thanks to its pro-growth economic climate and favorable geopolitics, unlocking extensive business opportunities for businesses worldwide looking to take advantage of the Kingdom’s growing global influence as a global investment hub, furthering its non-oil economic growth.
Tourism As a Key Pillar in Driving Economic Growth and Empowering the Private Sector
Building on last year’s momentum, Saudi Arabia kicked off the year with a trail of accomplishments, further bolstering its reputation as a source-leading market and investment hub. In the first quarter of this year, the country witnessed an impressive 10% increase in the number of tourists and a notable 17% rise in tourist expenditure from the corresponding period.
This comes on the back of a remarkable milestone of welcoming more than 100 million visitors in 2023, representing a 56% growth in tourist arrivals compared to 2019 and a 12% increase year-on-year, underscoring the Kingdom’s rising allure as a popular tourist hotspot owing to its strength in combining rich history, cultural heritage, natural resources, and modern attractions.
Looking ahead, the Kingdom anticipates a significant increase in the number of tourists, with projections reaching 110 million by 2030, along with a corresponding rise in expenditure to SR150 million. This projected growth coincides with the opening of several development projects in the Red Sea region.
Saudi Arabia continues to uphold its position as a global tourism leader. Additionally, it has witnessed a rising popularity among travelers from the Middle East and North Africa region.
According to recent studies, the Kingdom maintained a top ranking during Q1 among tourists from the region, further solidifying its position as a dominant player both regionally and globally, attracting an influx of tourists from all over the world locally, stimulating consumer spending and attracting capital investment to the country.
Deepening Business EU-Saudi Arabia Cooperation to Boost Non-Oil Economy
Saudi economy remains at an inflection point, as the Kingdom’s economic transformation plan unlocks new avenues for business expansion and international cooperation, making it the preferred region for international bodies to set up a physical presence.
One such organization is the European Chamber of Commerce, which recently inaugurated the European Chamber of Commerce in the Kingdom of Saudi Arabia (ECCKSA), a groundbreaking moment that signifies a new era in trade and economic cooperation between Saudi Arabia and the European Union (EU), contributing to the diversification of economic relations among the EU, Saudi Arabia, and the wider GCC region.
The ECCKSA will play a central role in advancing Vision 2030’s objectives to cement globally competitive non-oil sectors, paving the way for employment creation, empowering local talents, and enabling the country to evolve further into a leading innovation hub globally.
Motivated by the market opportunity, international businesses are increasingly eyeing the Saudi market as their next leg of expansion, including European firms. In fact, over 20% of our expansion network are high-growth companies that originated in the European region, with key leaders such as RSK, Fresha, and Unipart being illustrative examples.
With its business-friendly environment and geo-economic advantage, the Kingdom will realize its vision of becoming a business hub underpinned by enhanced private sector participation and a favorable investment climate, providing conditions for foreigners to operate their businesses efficiently, which will in turn contribute to the country’s sustainable, diverse economic growth.
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