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

Saudi Arabia’s Economic Shift: A New Dawn in Diversification and Reducing Dependence on Oil

Saudi Arabia is undergoing a significant shift in its economy, moving away from reliance on oil. For the first time in 2023, the non-oil sector accounted for 50% of the country’s GDP. This marks a milestone in the country’s diversification efforts and its goal to reduce dependency on fossil fuels.

The non-oil sector achieved a real GDP growth rate of 4.4% last year, reaching approximately 1.7 trillion Saudi riyals. The government introduced incentives 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 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 due to reduced activity in the oil sector caused by production cuts by OPEC countries. 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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