Saudi Arabia’s Non-Oil Economic Growth Exceeds Expectations
During the World Economic Forum in Davos, Saudi Arabia’s finance minister, Mohammed Al-Jadaan, addressed concerns about the International Monetary Fund’s revised GDP growth forecast for the Kingdom. He emphasized that focusing solely on GDP overlooks other crucial indicators of economic health.
The IMF adjusted Saudi Arabia’s GDP growth forecast for 2025 to 3.3%, considering extended oil production cuts. However, Al-Jadaan highlighted the Kingdom’s commitment to economic diversification under Vision 2030, which prioritizes non-oil GDP growth. He noted that non-oil sectors have been expanding robustly.
Private-sector investment has surged, rising from 16-17% of GDP to 24%, reflecting substantial structural changes. Despite having the capacity to increase oil production significantly, Saudi Arabia has strategically chosen to limit output to foster sustainable growth.
Al-Jadaan stressed the importance of considering various growth indicators beyond GDP. He pointed out that unemployment rates are at historic lows, and the private sector is thriving due to challenging but necessary decisions for long-term growth.
Artificial intelligence is seen as a potential driver for further economic diversification. Al-Jadaan suggested that Saudi Arabia could eventually export data instead of oil, emphasizing the need for competitive advantages within the AI value chain.
To support AI infrastructure, Saudi Arabia plans to leverage its ability to produce the world’s cheapest solar power, alongside agile policies for quick licensing. The Kingdom aims to treat data centers with diplomatic-level security, aligning with international standards.
Saudi Arabia is a leader in government cybersecurity, with operations entirely managed by Saudi talent. Al-Jadaan expressed optimism about the Middle East and North Africa (MENA) region’s growth prospects, despite challenges like high youth unemployment and geopolitical issues.
He underscored the region’s youthful, tech-savvy population and natural resources as strengths. Focusing on human capital development and regional reforms could unlock significant potential, leading to a transformative future for MENA.