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

Saudi Arabia’s Economy Shifts Away from Reliance on Oil with Non-Oil Sector Accounting for 50% of GDP in 2023

In 2023, Saudi Arabia’s economy underwent a significant shift away from reliance on oil, with the non-oil sector accounting for 50% of the country’s GDP for the first time. This marks a significant milestone in the country’s diversification efforts and moves towards achieving the goals set out in Vision 2030, which aims to reduce dependency on fossil fuels.

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. This growth is supported by incentives introduced by the government to promote the growth of services and manufacturing industries, which are seen as vital for creating job opportunities for the country’s young and educated population.

Private consumption in sectors like entertainment, hospitality, and tourism drove much of the non-oil sector’s growth last year, accounting for 40% of economic activity. The tourism sector, in particular, 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, while 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.

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