The world's largest economies by 2050: Saudi Arabia
Saudi Vision 2030 aims to wean the kingdom off oil by building up finance, industry, tourism and electronics. Non-oil sectors, including the public sector, now make up half of GDP.
“The world’s largest economies by 2050” (Saudi Arabia)
In January 2024 the International Monetary Fund said that Saudi Arabia had joined Argentina at the bottom of the G20 list because of slowing economic growth. As I noted above, the country’s GDP is falling because oil production has been cut under OPEC and OPEC+ agreements (in order to support oil prices) and because oil prices on world markets have dropped, since oil accounts for up to 40-45% of the country’s GDP. Yet, as data from the country’s General Authority for Statistics show, the non-oil market is rapidly increasing its share of GDP. Growth in the non-oil sector is tied to the implementation of the national strategy Saudi Vision 2030, adopted in 2016 by Prince Mohammed bin Salman.
“The world’s largest economies by 2050” (Saudi Arabia)
The strategy aims to reduce Saudi Arabia’s dependence on oil and diversify its economy by developing financial services, energy, public services, including healthcare, education, infrastructure, leisure and tourism, semiconductor manufacturing and electronics, with hundreds of billions of dollars to be invested in these sectors. In the first quarter of 2019 Saudi Arabia recorded its first surplus (a positive balance, with budget revenues exceeding expenditure) since 2014, when the surplus ($10.4 billion) was achieved through higher oil and non-oil revenues.
“The world’s largest economies by 2050” (Saudi Arabia)
The IMF cut its forecast for Saudi Arabia’s GDP growth in 2024 to 2.6% from 2.7% after the kingdom, together with other OPEC+ members, extended restrictions on oil supplies on the world market. The fall in oil revenues is an incentive to develop other industries under the Vision 2030 plan. The IMF is more optimistic about the country’s GDP growth in 2025, raising its forecast from 5.5% to 6%. Yet the country’s budget will still come under pressure, and the deficit will grow. Oil now costs about $72 a barrel. According to Bloomberg Economics, the kingdom’s break-even oil price is about $108 a barrel at current production levels, taking into account the domestic spending of the state wealth fund and the need to balance the budget.
“The world’s largest economies by 2050” (Saudi Arabia)
The Saudi government is increasingly focusing on non-oil industries and enterprises, where the vast majority of the population works. According to the country’s Ministry of Economy and Planning, the share of the non-oil sector (industry, including chemicals, car manufacturing, electric power and others), together with the public sector and wholesale and retail trade and the hotel and restaurant business, has reached 50% of GDP, a record high for the kingdom. The non-oil sector’s share of the economy amounted to approximately $453.3 billion. In 2023 private investment in the non-oil sector came to about $255.7 billion. The kingdom ranks first in the world for government spending on support for small and medium-sized businesses relative to total national expenditure, committing up to $24 billion to this area by 2025. The industrial sector is developing substantially, including petrochemicals, fertilisers, steel smelting and building materials, among others. In the car industry, the KSU Gazal-1 SUV, developed by students at King Saud University, became the first production car manufactured inside the country.