Vision 2030 reforms are rapidly reshaping Saudi Arabia’s economy as the country embraces tourism, retail, and entertainment to reduce oil’s share of GDP, which is expected to drop to 24-26% by 2030

Saudi Arabia’s Vision 2030 is driving the nation’s economy away from its historical dependency on oil revenues. S&P Global reports that by 2030, the oil sector’s share of the country’s GDP will decrease from over 30% in early 2024 to between 24-26%. This shift represents a significant transformation under the Kingdom’s ambitious Vision 2030 agenda, which seeks to diversify the economy by promoting non-oil sectors such as tourism, retail, and entertainment.

At the heart of this transition are several massive infrastructure and development projects, with NEOM being the centrepiece of Saudi Arabia’s $1 trillion investment plans. NEOM is set to attract nearly half of these funds, underscoring its importance to the country’s future. Even if some adjustments occur in the scope of these projects, Saudi Arabia’s overall economic outlook remains promising as the non-oil sectors continue to expand.

The government is keen to boost domestic consumption by encouraging household spending, which is currently lagging behind economies with similar GDP per capita. Vision 2030 initiatives aim to change that, focusing on enhancing the quality of life for citizens through the Quality of Life Program, which promotes recreational activities and cultural engagement. By 2030, household spending on entertainment is projected to rise from 2.9% to 6%, further driving growth in retail, tourism, and entertainment.

Tourism plays a key role in this economic shift. Saudi Arabia has set an ambitious goal to attract 150 million tourists annually by 2030. With projects like The Red Sea Project and AlUla underway, the country is building its infrastructure to support an influx of international tourists. Simplified visa processes and improved tourism facilities are already making the Kingdom a more attractive global destination. These initiatives will not only boost the economy but also solidify Saudi Arabia’s position as a leader in the non-oil sectors.

Social reforms have also been integral to this transformation, particularly the increasing participation of women in the workforce. In recent years, women’s labour force participation has more than doubled, from 18% to over 35%. This has contributed to rising household incomes, which in turn is expected to lead to a boost in consumer spending. Saudi Arabia is also focused on providing more employment opportunities for its citizens through its Saudization policies, ensuring that the local workforce is better integrated into key sectors like sports, entertainment, and tourism.

The construction sector is another critical component of Vision 2030. With large-scale projects such as NEOM, Qiddiya, and Diriyah moving forward, demand for construction services and materials has skyrocketed. This development will not only provide jobs but also significantly contribute to GDP growth over the next few years, despite reliance on imported materials for some projects.

By 2030, Saudi Arabia expects to have reduced its reliance on oil to unprecedented levels, setting the stage for a diversified and resilient economy. However, long-term success depends on improving productivity, enhancing education, and fostering innovation to maintain economic momentum.

Analysis

Political: Saudi Arabia’s Vision 2030 is a critical political move aimed at reducing the Kingdom’s vulnerability to global oil market fluctuations. By diversifying its economy, Saudi Arabia seeks to decrease its dependence on oil, which has long been the backbone of the nation’s wealth and international influence. Politically, this transformation could help the Kingdom secure a more stable future by broadening its economic base. The increased investment in non-oil sectors may also shift geopolitical dynamics, as Saudi Arabia becomes a more influential player in sectors like tourism and entertainment while maintaining its significant oil production capacity. The country’s efforts to reduce unemployment among Saudi nationals through Saudization policies could also have internal political implications, improving social cohesion and stability.

Social: Socially, the reforms spearheaded by Vision 2030 are transforming Saudi society. The increase in women’s participation in the workforce, which has already surpassed the original targets, marks a significant cultural shift in a traditionally patriarchal society. Women now play a key role in the country’s economic growth, with more access to education and employment in previously male-dominated sectors. The government’s focus on improving the quality of life through recreational and cultural opportunities is likely to reshape societal norms, encouraging greater engagement in arts, entertainment, and sports. As domestic consumption grows and more Saudis participate in leisure activities, this could lead to a more vibrant, inclusive society.

Racial: While Vision 2030’s goals are largely focused on economic and social development, they indirectly touch on racial and ethnic integration. As Saudi Arabia opens its doors to international tourists and workers, the Kingdom will likely experience an influx of diverse cultures and backgrounds. These interactions could challenge traditional notions of national identity and promote greater inclusivity, although they may also trigger resistance from more conservative factions. The emphasis on employment for Saudi nationals through Saudization may leave foreign workers at a disadvantage, potentially exacerbating existing inequalities based on race and nationality. Balancing the inclusion of foreign expertise with national employment goals will be crucial to ensuring fair and equitable growth.

Gender: Gender equality is a key element of Saudi Arabia’s social reforms under Vision 2030. Women have taken significant strides in sectors previously closed to them, such as sports and entertainment. The growing presence of women in the workforce has not only increased household incomes but also redefined gender roles within the Kingdom. Government efforts to include women in leadership roles and decision-making processes have been met with both enthusiasm and resistance, reflecting the ongoing tension between tradition and modernization. As gender barriers continue to break down, women are expected to contribute significantly to the non-oil economy, particularly in sectors like tourism and retail.

Economic: Economically, Vision 2030 represents a monumental shift for Saudi Arabia, as the Kingdom seeks to build a diversified and sustainable economy. Reducing the oil sector’s share of GDP to 24-26% by 2030 will be a historic achievement, signalling Saudi Arabia’s transition to a more resilient economic model. The expansion of tourism, retail, and construction will generate new revenue streams and reduce the country’s dependence on volatile oil markets. Large-scale projects like NEOM and The Red Sea Project will be key drivers of this growth, though the success of these initiatives will depend on maintaining investor confidence and managing external expertise. In the long term, improving labor productivity and investing in education will be critical to sustaining economic growth and ensuring that Saudi citizens are equipped to participate in the new economy.