As it works to fulfil the objectives of Vision 2030, the Kingdom of Saudi Arabia continues to shift its economy to non-oil sectors and towards a more diverse and sustainable one.
Long-term financial planning, expansionary spending policies, and the implementation of several new initiatives and strategies throughout 2025 are the means by which this is accomplished.
The Kingdom’s government will prioritise sectoral strategies and initiatives that foster economic transformation and growth by investing heavily in critical industries like mining, industry, tourism, agriculture, transportation, and logistics, as stated in the preliminary statement of the 2025 state budget.
Three Growth-Relating Factors
In 2025, Saudi Arabia’s economy will grow primarily due to three factors:
- First: The diminishing effect of declining oil prices worldwide.
- Second: Reduced interest rates will incentivise businesses to borrow money and grow to benefit from these reduced rates.
- Third: Quickening the growth rate of the non-oil industry, which includes multiple sectors like wholesale and retail trade, finance, insurance, construction, and transportation, as well as tourism, entertainment, and sports.
With an anticipated 4% annual growth rate, non-oil activities seem to become a significant contributor to the Kingdom’s overall economy. In 2023, non-oil activities grew at a rate of 4.4%. This momentum persisted from the start of 2024 until the third quarter of the same year, when it recorded a growth rate of 4.2%. Additionally, non-oil activities made up about 52 percent of real GDP because of the impressive expansion of the industrial, transportation and logistics, and tourism and entertainment sectors.
Preliminary estimates for 2025 indicate that real GDP growth will be 4.6%, driven by non-oil activities and increased private sector support through the implementation of projects and programs that have positive effects on the economy, society, and environment; promoting economic diversification; enhancing the business environment; improving the trade balance; and attracting more foreign and domestic investment.
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Tourism is the Primary Industry
One of the most significant industries on which the Kingdom depends to diversify its economy by 2025 is tourism. The government wants to turn this industry into “an integrated and promising system full of attractive investment opportunities,” particularly since it managed to reach the goal of 100 million tourists last year, which has been increased to 150 million this year.
To achieve this, the Kingdom is attempting to create tourist destinations and supply skilled domestic workers, transforming Saudi Arabia into a world-renowned travel destination that draws travellers from all over the world. It also highlights how prepared the Kingdom is to host significant international events in the future, like Expo 2030 and the FIFA World Cup in 2034.
Apart from tourism, there are significant and encouraging investments in renewable energy, particularly solar and wind power projects. By 2030, Saudi Arabia aims to have 50% of its energy come from renewable sources. Establishing a clean energy hub, the NEOM Oxagon project, further demonstrates the nation’s resolve to lead this sector.
Read more: Saudi Economic Forecasts for 2025
Moving Away from Oil
The Saudi Cabinet approved the Kingdom’s 2025 budget late last year. An estimated 1.184 trillion riyals were made, and 1.285 trillion riyals were spent overall. For the fiscal year 2025, according to calculations, the expected deficit would be 101 billion riyals, or about 2.3% of the GDP.
According to Saudi Finance Minister Mohammed Al-Jadaan, the Kingdom will keep investing in large-scale initiatives meant to lessen the reliance of the economy on oil earnings. He continued, “The budget for 2025 intends to keep increasing strategic expenditures on development initiatives in line with sectoral plans and Saudi Vision 2030 initiatives.”
The effects of the structural change in the Saudi economy have become evident during the last three years. Due to the growing growth rates of promising industries like tourism, entertainment, transportation, logistics, and industry, as well as the growing GDP contribution from the private sector, which has lessened the impact of oil market fluctuations on the economy. There has been a noticeable shift away from reliance on oil activities and towards non-oil activities.
As a place to send its money and a place to invest, the Kingdom has also worked to integrate its economy into the international financial market. The Crown Prince declared that the Saudi Sovereign Wealth Fund will take on “more than 10% of the world’s investment capacity” in this regard. The Kingdom has started taking proactive measures to diversify its economy despite the major obstacles the oil industry presents, which will soon allow non-oil activities to become the mainstay of the economy.
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