Saudi Arabia’s growth amid global seismic shifts

Mapping the intricate terrain of an ever-evolving global economic and geopolitical landscape in real-time is a near-impossible task. Nonetheless, in recent years a substantial divergence has taken place, signaling a departure from some of the principles that once underpinned globalization.

Ray Dalio addressed the concept of a “Changing World Order” during last year’s Future Investment Initiative in Riyadh. He emphasized that the present imperative to “pick a side” on domestic or international matters “doesn’t lend itself to compromise or thinking of the whole.” 

Discussions at FII 6 were rich with engaging exchanges on the dynamics of our evolving times, and I’m pleased to see that the overarching theme at this year’s FII 7 is aptly named “The New Compass.” In essence, it prompts us to consider: given the transforming world, what direction should we navigate toward? 

This is particularly pertinent for Saudi Arabia as — through Vision 2030 — it is now charting its unique path to success (and influencing international tides more than ever in the process). This fresh route looks to be more multilateral, as well as distinctly and proudly Saudi-first. 

With any change in direction comes some level of risk — Saudi Arabia’s central geographic position, cultural influence, investment firepower, and abundant natural resources make it a key international player. Being a deeply interconnected economy like KSA naturally exposes it to external friction. However, shifting global fault lines also present opportunities for those nations that, as Dalio alluded to, remain neutral and focus on building bridges rather than barriers. 

And Saudi Arabia is proving its resilience — despite worldwide shocks such as the pandemic and economic decoupling, its transformation in recent years has been unparalleled. The results speak for themselves: private sector participation of nationals is at an all-time high, Saudi Arabia’s gross domestic product has exceeded $1 trillion for the first time, it was the fastest-growing G20 economy in 2022, and its fiscal position is the envy of many advanced economies.

So, as international waters get more turbulent, how is Saudi Arabia navigating its growth toward economic and cultural transformation? There are numerous examples — take, for instance, the funding going into renewable energy today — such as the National Development Fund’s investment into the $2.21 billion Al-Shuaibah solar project, which is in partnership with Aramco and will provide green electricity to more than 450,000 families. 

There is also the recently announced EV infrastructure company — a partnership between the Public Investment Fund and the Saudi Electricity Co. that plans to install 5,000 EV chargers by 2030. 

Examples abound, but let’s drill down into industries that particularly signify openness and movement — travel, tourism, trade, logistics — as our exemplars. 

The aviation industry in the country is soaring with ambitious new airlines, airports, and digital-first updates to existing players. Sustaining this momentum, the 2022 Saudi Aviation Strategy predicts that the aviation sector's contribution to the economy will more than triple from $21.3 billion in 2018 to $74.6 billion by 2030. 

On the trade and logistics front, Saudi Arabia will play a crucial role in the new India-Middle East-Europe multimodal transport corridor, spanning more than 3,000 miles and creating vital multipolar connections for the movement of goods and services. The potential here is immense — India is Saudi Arabia’s second-largest trading partner. The country’s top five partners — China, India, Japan, South Korea, and the UAE — highlight the robustness of the “New Silk Road,” through which we are seeing the strengthening of connections.

Saudi Arabia is also venturing into uncharted territory in the fields of tourism, destinations, sports, culture, and entertainment. Given the energy economy is so reliant on the globe’s shifts, doubling down on the resident, non-oil economy is absolutely the right move. 

Saudi Arabia has a long-standing tradition of welcoming visitors — as the cradle of Islam, it is the world’s most prominent Islamic tourism destination. However, the tourism industry is expanding further. According to the UN, Saudi Arabia recently ranked second in the world in terms of growth in tourist arrivals, with visitor numbers increasing by 58 percent from the first seven months of 2019 to the same period in 2023. 

At this year’s Arabian Travel Market, Saudi Tourism Minister Ahmed Al-Khateeb eloquently summarized the Kingdom’s new direction, stating that “the world in the 1920s came to Saudi for oil. Now, in the 2020s, the world will come for tourism — the new oil.” The country is investing heavily to support this vision, including the opening of a new school of tourism and hospitality in Riyadh’s Qiddiyah entertainment and tourism district by 2027 to bolster local talent. 

Overall, Saudi Arabia plans to invest $800 billion in tourism to increase the industry’s contribution to the GDP to 10 percent by 2030.

When considering the big picture, Saudi Arabia’s recent transformation has been a success both socially and economically. However, the current global paradigm shift adds complexity and pressure and can be challenging to navigate. By prioritizing the development of a fiscally diverse economy, Saudi Arabia is taking a smart approach to maneuvering these global tectonic shifts. This strategy not only makes the country more robust in the face of economic challenges but also insulates it without closing it off — in fact, industries like tourism do quite the opposite.

As parts of the world become more fragmented, Saudi Arabia continues to create new connections, industries, and opportunities, expanding its competitive landscape. And it’s in a position to build, with a central government debt level to GDP ratio of only 22.5 percent in 2022, Saudi Arabia’s fundamentals are strong and prudent.

Global economic shocks create uncertainty and challenges, yes, but also an opportunity — and Saudi Arabia is proving resilient in its ability to map out its vision and build networks in the face of these seismic shifts. I am excited to engage in discussions on this topic at FII 7 in Riyadh.

• Mathieu Vasseux is a partner and head of Saudi Arabia at Oliver Wyman, a global management consultancy.