Saudi Arabia hits important economic milestone: Non-oil activities at 50% of GDP

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Saudi Arabia’s economy has reached a key economic milestone as the non-oil sector activities comprised 50 per cent of the country’s real GDP in 2023.

This is the highest share ever recorded in the country’s economic activity makeup.

This achievement, analysed from data provided by the General Authority for Statistics and the Ministry of Economy and Planning, underscores the kingdom’s ongoing economic diversification efforts.

Consumer spending, private investment push non-oil economy

The non-oil economy, valued at SAR1.7tn (approximately $453bn) at constant prices, has been buoyed by growth in investment, consumer spending, and exports.

Private-sector investment, in particular, has surged by 57 per cent over the past two years, reaching a record high of SAR959bn ($254bn) in 2023.

Leading the charge in non-oil activities are arts and entertainment, which saw an exceptional 106 per cent growth between 2021 and 2022.

Other sectors, including accommodation, food services, transportation, and storage, also experienced robust growth, expanding by 77 per cent and 29 per cent, respectively.

The growth in non-oil activities spans various sectors, with social services, healthcare, education seeing a 10.8 per cent growth; transportation and communication growing by 3.7 per cent, and trade, restaurants, and hotels all registering significant increases of 7 per cent.

Notably, real service exports, driven primarily by tourist spending, soared by an astounding 319 per cent over the past two years, reflecting Saudi Arabia’s transformation into a global tourism and entertainment hub.

Vision 2030

This surge in non-oil activities aligns with the objectives of Saudi Vision 2030, aimed at achieving an economy through diversified growth drivers.

The success in implementing key programmes outlined in the vision underscores the kingdom’s commitment to fostering new sectors that contribute to higher growth rates.

In addition to the non-oil sector, Saudi Arabia’s business sector is witnessing promising growth across various segments.

The Ministry of Commerce’s quarterly business sector bulletin for Q4 2023 highlights a rise in commercial registrations, particularly in land transport of goods, hospitality, technology, tourism, and specialised services.

Key sectors such as manufacturing, creative industries, and marine recreation are also experiencing notable growth, reflecting a vibrant and expanding business landscape in Saudi Arabia.

• By the end of Q4 2023, commercial records reached 33,447,000, marking a 21.2 per cent year-on-year growth compared to the same period in 2022.
• The hospitality and technology sectors experienced notable growth. “Resorts” activity saw a significant 51 per cent annual increase, totaling 3,377,000 records by Q4 2023. Makkah accounted for 40.4 per cent of this growth, with 1,364,000 records. Additionally, “software publishing” exhibited a healthy growth rate of 28.8 per cent, reaching 4,009,000 records.
• The rise in tourism and specialised services is evident. “Boutique hotels” witnessed a surge of 74.4 per cent, recording 1,911,000 commercial records by Q4 2023. Makkah contributed significantly to this growth, representing 45.2 per cent with 863,000 records. Furthermore, the demand for cloud computing services led to a 40.5 per cent annual growth in “providing cloud computing services” registrations, reaching 1,759,000 by Q4 2023.
• Growth is also observed in manufacturing and creative industries. “Manufacturing medical instruments and equipment” activity increased by 28.3 per cent, with commercial records totaling 1,322,000 by Q4 2023. “Visual arts activities” experienced the highest growth percentage at 103.5 per cent, showcasing a thriving creative sector.
• Data indicates a growing interest in marine recreation, with commercial registrations for “marine clubs” increasing by 49.1 per cent by Q4 2023.

Overall, the data points to a positive trajectory for the kingdom’s economy, driven by diversification and growth across multiple sectors.

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