• Initiative -
  • Type General news
  • Date 25th April 2021

Strong Growth Forecast for Saudi Economy

Along with the fifth anniversary of the historic launch of Saudi Vision 2030 (SV2030), the King Abdullah Petroleum Studies and Research Center (KAPSARC) published a research paper to discuss the macroeconomic and structural transformation according to SV2030, with an emphasis on economic diversification in order to shape the roadmap toward a diversified and sustainable Saudi economy.

The paper, titled “Economic Diversification Under Saudi Vision 2030: Sectoral Changes Aiming at Sustainable Growth,” expected that the Saudi economy would grow over the coming decade. The finance, insurance, real estate and business sectors will expand by 9% annually over the coming decade, increasing its relative share to almost 12% of overall economic activity.

The paper, published by KAPSARC’s researchers in the Energy and Macroeconomics program (David Havrlant and Abdulelah Darandary), used the Vision 2030 Dynamic Input-Output Table (V2030 IOT). The selected projection methodology was applied to eight of the key economic transformation targets, namely: increasing the contribution of the private sector to GDP, increasing the local content of the oil and gas sector, raising the share of non-oil exports in non-oil GDP, improving the country’s position in global logistics, boosting the capacity to welcome Umrah pilgrims and support tourism, promoting household spending on entertainment activities in the Kingdom, increasing the country’s renewable energy capacity, and increasing the government’s non-oil revenues.

The researcher David Havrlant indicated that the findings of the paper revealed that the wholesale and retail trade, restaurants and hotels sectors ranked at the top among the sectors with significant GDP share increases between 2020 and 2030, followed by transport, storage and communication, then finance, insurance and real estate services. Meanwhile, the crude petroleum and natural gas sector ranked the lowest, as it is expected to expand at a relatively slower pace compared with the diversification focal sectors.

For his part, the senior research analyst Abdulelah Darandary mentioned that the manufacturing and services sectors will become further pillars of sustainable economic growth and will lead the diversification process in the Kingdom. This will create demand for a new type of services, such as data storage and management, and the advanced monitoring of energy transport and distribution.

Darandary explained that the paper’s projections showed that economic diversification would make the Saudi economy more resilient to external demand shocks, help create higher-skilled jobs, establish a knowledge-based economy, and pave the way toward a more diversified and sustainable economy.

It is noted that despite the repercussions of the pandemic, KAPSARC ranked 12th out of 60 research centers in the Energy and Resource Policy Think Tank category, and ranked 15th out of 101 research centers in the Middle East and North Africa (MENA), according to the University of Pennsylvania Think Tank and Civil Societies Program.

 

This article originally appeared on Arab News