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

Saudi Arabia is experiencing a major shift in its economy, moving away from reliance on oil and towards diversification. The non-oil sector of the country accounted for 50% of its GDP for the first time in 2023, marking a significant milestone in the country’s efforts 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 was supported by incentives introduced by the government to promote services and manufacturing industries, which are essential for creating job opportunities for the young and educated population of the country.

Private consumption in sectors such as entertainment, hospitality, and tourism played a significant role in driving much of the non-oil sector’s growth last year, accounting for around 40% of economic activity. The tourism sector saw particularly impressive growth with $13 billion in private investments and attracting millions of visitors both domestically and internationally.

Despite these achievements, Saudi Arabia experienced a decline of 4.3% in real GDP in 2023 due primarily 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 contribute significantly to the economy overall.

By Riley Johnson

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