How Does Saudi Arabia Plan to Diversify Its Oil-Based Economy?

Published June 9th, 2021 - 02:00 GMT
Saudi economy
Saudi 2030 vision has been in progress for years. (Shutterstock: Pilotsevas)

Despite it being the biggest economy amongst the region's oil-rich countries, Saudi Arabia has recently acknowledged the need to diversify its economy to maintain a strong financial status in the coming decades.

Since the 1970s, Saudi Arabia has seen huge changes on all levels, influenced by the exploration of oil in different parts of the kingdom. Since then and until a few years ago, the Saudi government had relied heavily on its thriving oil industry as the main source for its economic prosperity. By 2018, oil accounted for roughly 87% of Saudi's budget revenues, 90% of export earnings, and 42% of GDP.

Yet, in recent years, several factors have driven the kingdom's leaders' to start planning a more sustainable economic future, ending the country's dependence on oil. These factors range from the volatility of oil prices that can be costly to the Saudi economy in times of crises, in addition to the increasing global effort to curb the use of fossil fuels and replace it with renewable energy as a more sustainable and eco-friendly option, in addition to the country's growing potential to achieve success in technology, tourism, and other sectors.

In April 2016, Saudi's Crown Prince Mohammad Bin Salman uncovered what has been termed as the Saudi 2030 Vision, which is meant to gradually lessen the country's reliance on petroleum-related industries and start channeling investments into other sectors instead.

Even though the plan has been deemed "extremely ambitious" given the 2030 deadline has been in progress ever since, even during the pandemic-hit 2020.

The vision does not only aim to pump $3.2 trillion into the national economy by 2030, with hopes to boost green business opportunities that serve a variety of industries but it is also meant to create millions of new jobs that will consequently help to improve life quality for both the local community and the region at large.

Over the last five years, Saudi Arabia has already launched a series of megaprojects that serve the digital economy, the health sector, infrastructure, green energy, tourism, environment, culture, and many others.

It has also accompanied its business plans with major social changes that are meant to facilitate and align with the new lifestyles that will emerge as a result of the new economic reality. For example, prior to the COVID-19 outbreak, Saudi Arabia had reopened cinemas for the first time in four decades, opened a variety of entertainment centers and museums across the country, in addition to inaugurating a number of music festivals that welcomed local, regional, and international artists, in an attempt to drive a larger number of tourists into the country. Moreover, the Saudi government has loosened restrictions on women's dress code to help international visitors enjoy their visits to the country.

Finally, even amid restrictions imposed following the spread of the novel coronavirus, Saudi announced a  groundbreaking project that aims to build a new futurist and environment-friendly city called The Line, which once completed might be one of a kind in the world.

Which of Saudi's 2030 vision plans do you think will have the biggest impact on the country's economy?

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