Since the launch of the Kingdom’s Vision 2030, there has been a far-reaching impact on the economy and its citizens as the nation continues accelerating various reforms. These reforms aim to reduce oil dependency, diversify income sources and enhance competitiveness on a global scale. Its success has now positioned Saudi Arabia as a global driver for innovation. It created massive economic opportunities in the region, driving the sustainability agenda as it looks beyond Vision 2030.
Our inaugural report, Saudi Economy Watch: Vision 2030 on track at the half-way mark, discusses key economic trends. These include non-oil diversification, improving infrastructure, advancing digitalization and creating competitive business environments. The report also measures the nation’s performance in different sectors impacted by the ongoing economic transformation.
The report begins by focusing on the areas of outstanding success. These include:
- Improvement in female labor force participation. Female economic empowerment has improved the earning potential of households.
- Increase in home ownership. This is likely to surpass targets by 2030 underpinned by the Vision’s objective. It states that “housing is the foundational asset that is capable of shaping and influencing the vibrancy of families, communities, and broader society.”
- Decline in unemployment. The inclusion of Saudi women into the labor force has resulted in a dip in unemployment. Unemployment hit 8 percent in Q4 2022, the lowest on record, down from the baseline of 11.6 percent. It is well on the way toward the 2030 target of 7 percent.
- Robust economic performance. Saudi Arabia has been the fastest-growing nation among G20 countries. It moved from the 19th to the 17th position.
- Largest Sovereign Wealth Fund in the world. The PIF is rapidly becoming one of the largest SWFs in the world, just shy of the top 5, based on the latest rankings.
- Increase in non-oil fiscal revenues. The Kingdom’s non-oil fiscal revenue, which is expected to remain above $1 trillion in 2023. The IMF predicted it will grow to $1.3 trillion by 2028.
What has to be done
To build on the Kingdom’s transformation, more needs to be done to boost performance on non-oil exports and the flow of FDI. Continued investments will support this to enhance and bring versatility to the economy.
It will take time for transformative investments to bear fruit, but the government is committed to strengthening new sectors such as tourism, hospitality, media and entertainment, mining and metals, digital and financial services and renewable energy. We are already seeing some transformative work happening in NEOM, AlUla, Diriyah and the Red Sea project. Having worked closely with some of these giga projects, I have understood the long-term implications of the Kingdom’s initiatives on the economy and our community.
KSA’s Vision 2030 is based on three major pillars: “Ambitious Nation,” “Thriving Economy” and “Vibrant Society”. These have shaped the national strategy and within each of these targets, we have been able to see substantial change and impact:
- Ambitious Nation: Non-oil revenue grew from 163 billion to 411 billion, aiming for 1 trillion by 2030.
- Thriving economy: Saudi home ownership soared from 47 percent to 67 percent since 2022, closing in on the 2030 goal of 70 percent.
- Vibrant society: Female labor force participation is now at 36 percent in 2023 exceeding its 2030’s 30 percent target.
It has also been interesting to see the non-oil economy becoming a key driving force in KSA’s transformation journey. We as a nation have been able to bounce back from the pandemic and reimagine Saudi Arabia based on new initiatives and ideas that support the country as a whole. The report identifies the following areas within the non-oil sector that have grown beyond the pre-pandemic days. These are:
- Trade and hospitality: up by 25 percent
- Manufacturing: up by 17 percent (excluding oil refining)
- Finance and business services: up by 16 percent
The Kingdom’s non-oil private sector is leading in growth, having accelerated to 5.8 percent in Q2 2023 and currently stands at 13.9 percent higher than in 2019.
We are expecting to see the true impact of the Vision unfold well beyond 2030. The reforms and diversification have set the foundation for future development and investments that aim to transform the economy and shift away from oil dependency.
Oil production cuts have also encouraged Saudi to continue its ongoing progress towards expanding its competitive reach amongst the listed sectors. The shift from oil to non-oil sectors is intended to address multiple objectives to support the Kingdom’s initiatives and achieve a diverse economic agenda. These areas of focus are:
- Wholesale and retail trade and transport sectors, driven by the rebound in tourism, especially religious tourism
- Recovery in the Financial Services sector
- Rebound in non-oil manufacturing activity
At PwC, we work with our clients to help accelerate their efforts to achieve transformation goals across the Kingdom. We do this through nurturing the best talent and embracing the most innovative technologies to help our clients deliver sustained outcomes. Our latest report captures the growing economic changes that set the road for other long-term endeavors as the Kingdom gets ready for a population target of 9 million by 2045.
About Faisal Alsarraj
Faisal Al-Sarraj is a deputy country senior partner at PricewaterhouseCoopers (PwC) KSA. He boasts 24 years of expertise in transformation, program management, process re-engineering, digital banking and alternate delivery banking channels. Over the past 13 years with PwC, he has provided strategic execution guidance to government clients, including the Ministry of Human Resources and Social Development, Ministry of Economy and Planning, Ministry of Culture, Adaa and others.
Faisal also played a key role in establishing project management offices (PMOs) at various government entities, contributing significantly to their execution capabilities. Before PwC, he gained valuable experience in the banking sector, working at Samba and Arab National Bank. Additionally, he is a founding member of the Saudi Association for Management Consultants.
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