Non-Oil Income Contributes to 50% of Saudi Arabia's GDP

By IndraStra Global News Team

Cover Image Attribute: Riyadh's skyline. / Source: Shutterstock

For many years, Saudi Arabia has been seen as the informal leader of OPEC and a crucial swing-producer in stabilizing oil prices. In recent times, the nation has taken on the majority of OPEC+ production cuts, agreeing to reduce output by 1 million barrels per day, nearly half of the group's pledged cuts. Despite initial concerns, Saudi Vision 2030 is yielding positive results, with Riyadh possibly not feeling the impact of these cuts as much as anticipated. The Ministry of Economy and Planning in Saudi Arabia has disclosed that non-oil revenues reached an all-time high of 50% of the country's GDP in 2023.
The non-oil sector of the economy was valued at 1.7 trillion Saudi Riyals (approximately US$453 billion) at consistent prices, driven by steady growth in exports, investments, and consumer spending. Private-sector investments in the Kingdom surged by an impressive 57% to reach a new peak of 959 billion Saudi Riyals (US$254 billion) last year. Notably, sectors like arts & entertainment and real service exports saw triple-digit growth rates, indicating Saudi Arabia's emergence as a global hotspot for tourism and entertainment. Additionally, the food sector grew by 77%, while transport and storage services expanded by 29%. Health and education recorded growth of 10.8%, and trade, restaurants, and hotels saw a 7% increase, with transport and communications rising by 3.7%. These figures underscore the diversification and robust growth of Saudi Arabia's economy.
Three years ago, Crown Prince Mohammed bin Salman of Saudi Arabia introduced Saudi Vision 2030, an ambitious initiative to transform the Kingdom's economy, foster global engagement, and enhance citizens' quality of life. Central to this vision is the diversification of the Saudi economy and the creation of vibrant employment opportunities through the privatization of state-owned assets, including a partial IPO of Saudi Aramco. This strategy involves unlocking potential in underdeveloped sectors such as renewable energy, manufacturing, and tourism, alongside modernizing educational institutions from early childhood through higher education.
As part of the economic blueprint, Saudi Arabia has set an ambitious goal to develop approximately 60 gigawatts (GW) of renewable energy capacity by 2030, a significant increase from the current installed capacity of only 2.8 GW. Given its abundant solar resources and consistent Red Sea winds, Saudi Arabia holds immense potential for renewable energy generation. Additionally, Saudi Aramco plans to invest $110 billion in the next few years to develop the Jafurah gas field, expected to hold 200 trillion cubic feet of gas, which will be utilized to produce cleaner fuel, specifically Blue hydrogen.
Furthermore, the Saudi government is constructing a $5 billion green hydrogen plant, Helios Green Fuels, to power the futuristic city of Neom. This plant will harness solar and wind energy to generate 4GW of clean energy for producing green hydrogen. Notably, Saudi Aramco made history by shipping the world's first blue ammonia from Saudi Arabia to Japan, reflecting Japan's interest in securing reliable hydrogen fuel suppliers. Saudi Arabia and Australia are among its preferred choices.
However, Saudi Arabia is one of many beneficiaries of economic diversification efforts in the region. The World Bank's Gulf Economic Update (GEU) highlighted significant progress in diversification across the Gulf Cooperation Council (GCC) countries. Despite challenges in the oil sector, the region saw a GDP growth of 1% in 2023, with non-oil sectors playing a crucial role in economic expansion. The World Bank forecasts a rebound in economic activity, with GDP growth projected to reach 3.6% and 3.7% in 2024 and 2025, respectively. This growth will be primarily driven by non-oil sectors, supported by fiscal policies, strategic investments, and sustained private consumption.

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