By Billy FitzHerbert
LONDON — Four years after Saudi Arabia launched its Vision 2030 development strategy, the non-oil economy is benefitting from sustained reform as projects across a range of sectors come to fruition.
Meanwhile, the country will become the first Arab nation to host the G20 Leaders’ Summit in November 2020, with the gathering set to address the unprecedented global economic challenges brought on by the COVID-19 pandemic in the first half of the year.
The Kingdom entered 2020 on the back of modest 0.3% growth in 2019 and despite early challenges, the economic and social measures that have been introduced in recent years bode well for the country’s health in the medium to long term.
Oxford Business Group (OBG) has launched its edition of The Report: Saudi Arabia 2020. The launch of the report comes at a time of significant global uncertainty with the COVID-19 pandemic having shut down many economies worldwide as governments impose strict stay-at-home guidelines to curb the spread of the virus.
In Saudi Arabia the response to the pandemic has been swift, with authorities quick to implement safety measures that include travel restrictions, the closure of all schools, universities and shopping malls and the suspension of prayers at mosques.
In early April the Ministry of Haj called on countries to delay their bookings for the 2020 pilgrimage, and on April 22 the government announced a repatriation program to facilitate the return of expatriates living in the Kingdom.
Previously authorities had announced temporary housing guidelines for foreign workers to help limit the spread of the virus. The sharp drop in global oil prices as oversupply on world markets came up against huge drop offs in demand in the month of April has added to the turmoil.
In mid-April the OPEC+ group of oil producing countries agreed to cut global production by 9.7m bpd, almost 10% of global supply and the biggest single production cut ever agreed in history.
While the long-term impact of the pandemic on the Kingdom’s economy will not be known for some time, there are areas of the economy that have responded quickly and positively to the new reality.
Technology has been leveraged across the board, in particular to implement distance-learning initiatives and launch new e-health resources to help manage the effects of the pandemic.
Business too has had to adapt quickly, deploying new digital tools to stay in touch with each other and their clients, while e-commerce has also witnessed a significant spike as people migrate online to carry out their essential purchases.
This shift is giving the country’s economic digitization goals an indirect boost, with the Kingdom’s Vision 2030 development plan aiming to increase the proportion of online payments to 70%, up from less than half that number in 2020.
In addition to examining some of these short-term impacts, OBG’s new report also examines many of the priorities outlined in Vision 2030 and the long-term strategies that have been laid down to achieve them, with comments and insights from the Kingdom’s key business and political players.
In particular, the country’s industrial sector has emerged as a key driver for economic change in recent years, with the technologies associated with the Fourth Industrial Revolution underpinning this surge.
Also in line with Vision 2030 goals, the Kingdom’s investment in financial education and training is increasing the number of nationals in high-ranking positions and improving financial literacy across the board.
More immediately, Saudi Arabia’s financial sector has responded decisively to the crisis, taking steps to secure the supply of credit for firms across the Kingdom.
Saudi Arabia’s stock market (Tadawul) was recently listed on several global emerging market indices the market has also seen the IPO of national champion Saudi Aramco at the end of 2019 demonstrating the considerable strides being taken in the nation’s capital markets.
These developments are being bolstered by the new products encouraging foreign participation. Finally, while the pandemic is set to significantly slow visitors in the near-term, Kingdom’s moves in 2019 to relax visa rules for tourists is set to be a game changer in the decade ahead.
Developments associated with culture, arts and national heritage are expected to drive economic diversification, create jobs and open the Kingdom to a broader international audience for the first time.
— The writer is Middle East regional editor of Oxford Business Group (OBG)
