The International Monetary Fund (IMF) has recently highlighted Saudi Arabia’s tourism sector as a major contributor to the country’s economic diversification in its latest 2024 Article IV Consultation report.
The fund acknowledged Saudi Arabia’s success in surpassing the Vision 2030 target of attracting 100 million visitors annually by 2023, seven years ahead of schedule.
Tourism shifts service balance to surplus
The IMF also underscored the role of tourism in shifting Saudi Arabia’s service balance to a surplus. The Kingdom is now earning more from international visitors than it is spending on outbound tourism. In 2022, this shift resulted in a positive balance and 2023 saw further gains due to greater revenues from transportation and service exports.
In 2023, Saudi Arabia’s tourism revenues reached $36 billion with net tourism income increasing by 38 percent. Meanwhile, the sector’s direct and indirect contribution to GDP reached 11.5 percent, with expectations to grow to 16 percent by 2034.
Central to this growth has been a combination of both strong domestic demand and international arrivals. Non-religious tourism has surged, with increased leisure travel and visits to friends and relatives driven further by major international events such as Formula One, the 2027 Asian Cup, and the 2030 World Expo.
Read: Saudi Arabia enhances air connectivity with new direct flight route from Riyadh to London
Non-oil growth to reach 4.4 percent
The report notes that Saudi Arabia’s transformation was successful due to the tourism sector’s ability to cooperate with other key sectors. These connections are helping to reduce Saudi Arabia’s reliance on oil-intensive sectors.
The IMF expects non-oil growth in Saudi Arabia to reach 4.4 percent in the medium term following a slowdown in 2024. The growth will be primarily driven by stronger domestic demand and the acceleration of project implementation.
Major giga projects like Red Sea Global and Diriyah Gate are pivotal in this shift since they focus on luxury tourism, culture preservation, and infrastructure improvements.
The IMF’s recognition of Saudi Arabia’s progress reflects the vast potential of its tourism sector which has developed in line with Vision 2030. The fund also notes the Kingdom’s capacity to drive sustainable economic growth in the years to come.
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