Rabat – Saudi Arabia’s economy and social scene are about to undergo major transformations which could attract up to $1 trillion in investment over the next 15 years, according to a new research from Oxford Strategic Consulting, Oxford Economics and Control Risks.
The strategy takes into consideration the fact that Saudi Arabia’s current economic model simply isn’t working anymore. With oil prices dropping for the foreseeable future, Saudi Arabia’s Vision 2030 spells out a complex plan for diversifying the Saudi economy away from its dependency on oil.
There is also a growing and vibrant young population in the kingdom, eager to explore the outside business world via technology. Vision 2030 includes strategies for welcoming this segment of the population into the workforce and, in general, creating a more engaged and open Saudi society.
According to Graham Griffiths, an Analyst with Control Risks Middle East, “Saudi Arabia is embarking on a radical transition that promises to open up many economic opportunities for investors. However, the kingdom will remain a challenging environment to work in, as the traditional way of doing business – both within the government and in the private sector – meets the new economic model. Informed analysis of the rapidly changing political, economic and social landscape in the kingdom will be vital to seizing the opportunities presented by Saudi Vision 2030.”
The GDP Story
As Vision 2030 gains traction, the research indicates that Saudi Arabia’s GDP could double and see the creation of as many as six million jobs by the target year of 2030. Improved Human resources in the kingdom could also add as much as $6.44 billion to Saudi Arabia’s GDP.
Currently, the private sector contributes 40 percent to the kingdom’s GDP. With Vision 2030 fully realized, analysts are hoping to see this rise to 65 percent. According to the report, “Meeting this target requires stronger private sector annual GDP growth by five percentage points per year versus baseline growth. This would grow the private sector on average by 13% per year (in nominal terms), resulting in private sector GDP growing by a factor of six in just fifteen years.”
While the ambitious strategy of Vision 2030 is being welcomed, considerable challenges lay ahead. Both foreign and local firms alike, are going to need to have a thorough knowledge of the Saudi market situation in order to maximize their opportunities. This will require embracing a complex set of reforms and “human capital considerations.”