Saudi Arabia Reaches a Milestone in Diversifying Away from Oil-Based Economy

Saudi Arabia is undergoing a significant shift in its economy, moving away from reliance on oil. This shift is reflected in the non-oil sector accounting for 50% of the country’s GDP for the first time in 2023. The government has introduced incentives to promote growth in services and manufacturing industries, which are seen as vital for creating job opportunities for the young and educated population.

Government data shows that the non-oil sector achieved a real GDP growth rate of 4.4% last year, reaching approximately 1.7 trillion Saudi riyals. Private consumption in sectors like entertainment, hospitality, and tourism drove much of this growth, accounting for 40% of economic activity. The tourism sector has seen significant growth with $13 billion in private investments and attracting millions of visitors both domestically and internationally.

Despite these achievements, Saudi Arabia experienced a 4.3% decline in real GDP in 2023, primarily due to reduced activity in the oil sector caused by production cuts by OPEC countries. However, mining and quarrying remain crucial sectors for the country, accounting for one-third of total non-oil output. Manufacturing, real estate, and construction also make significant contributions to the economy. Overall, Saudi Arabia is making progress towards economic diversification and reducing its dependence on oil revenues.

By Sophia Gonzalez

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