Non-Oil Activities Drive Saudi Economic Diversification Efforts

A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
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Non-Oil Activities Drive Saudi Economic Diversification Efforts

A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)
A view of containers at Jeddah Islamic Port on the western coast of Saudi Arabia (Saudi Ports Authority)

Non-oil activities are playing an increasingly pivotal role in diversifying Saudi Arabia’s economy, currently contributing 51% to the total real GDP, with expectations to reach 65% by the decade’s end.

This shift aligns with the country's efforts to rely on varied income sources across multiple sectors and enhance human capital development in line with Vision 2030.

Saudi Arabia leads in cleaner hydrocarbon energy production and is a frontrunner in renewable energy sectors such as green hydrogen, solar, wind, and others. Notably, it is establishing the world’s largest green hydrogen production facility with a total investment of $8.4 billion.

Faisal Al-Ibrahim, Saudi Minister of Economy and Planning, highlighted the sustained strong growth of non-oil activities since the inception of Vision 2030, constituting 51% of the real GDP, surpassing the oil sector's contribution.

He emphasized the Kingdom’s achievements and prioritized accelerating economic diversification and enhancing human capital development.

“We are now on the brink of a new economic era that will witness transformative changes in the coming decades,” affirmed Al-Ibrahim.

Experts speaking to Asharq Al-Awsat anticipate non-oil sector participation to rise to approximately 65% by 2030, driven significantly by private sector contributions. They noted significant economic evolution towards income sources beyond oil, such as investments in coastal infrastructure projects.

Dr. Abdullah Al-Jassar, member of the Saudi Energy Economics Association, believes the current 51% contribution of the non-oil sector will increase to about 65% by the decade’s end, bolstered by substantial private sector involvement.

He highlighted Saudi Arabia’s notable economic shift towards relying on non-oil activities as a primary source of growth, propelled by key factors including ambitious Vision 2030 programs aimed at economic diversification and reducing oil dependency.

Massive government investments in infrastructure and developmental projects in non-oil sectors like tourism, particularly between 2015 and 2020, exceeding billions of riyals, significantly accelerated economic diversification and renewable energy sector development.

Al-Jassar pointed out that “tourism leads the forefront of key sectors currently relied upon by the non-oil economy,” growing at an average annual rate of 10%, contributing 10.4% to the GDP according to the Q1 2024 Statistics Authority report.

This also includes sectors like mining, manufacturing, and agriculture.

He expects expanding promising sectors such as biotechnology, artificial intelligence, digital economy, and developing logistics services infrastructure to be crucial for export operations, advancing non-oil activity growth.

Al-Jassar assumes non-oil activities will continue to accelerate in the coming years, given the clear roadmap for diversifying the non-oil economy, alongside emerging opportunities attracting more investments to fund their activities. This will enhance Saudi Arabia's resilience against future economic challenges triggered by oil price fluctuations.

Financial advisor Ahmed Al-Jubeir emphasized Saudi Arabia’s long-term strategy for non-oil economic growth, aiming to enhance society, tackle inflation, and strengthen economic, financial, and monetary policies under Vision 2030.

He noted that this strategy would diversify revenue sources without relying on oil, ensuring the sustained evolution and prosperity of the Saudi economy.

This includes investing in citizens, improving their income by providing employment opportunities for all, solving unemployment and housing issues, and increasing women's participation in the workforce to support human resources.



Honda, Nissan and Mitsubishi Drop Talks on Business Integration

This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
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Honda, Nissan and Mitsubishi Drop Talks on Business Integration

This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)

Japanese automakers Honda, Nissan and Mitsubishi said Thursday they are ending talks on business integration.
Nissan Chief Executive Makoto Uchida said the talks had changed focus from setting up a joint holding company to making Nissan into a subsidiary of Honda, The Associated Press reported.
“The intent was to join forces to win in the global competition, but this was not going to realize Nissan's potential, so I could not accept it,” he told reporters. He said that Nissan was going to aim for a turnaround without Honda instead.
Honda Chief Executive Toshihiro Mibe said in a separate news conference that Honda had suggested a stock swap to speed up decision-making.
“I am really disappointed,” Mibe told reporters. “I felt the potential was great, but I also knew actions that would bring pain were necessary to realize that."
The automakers agreed to end their agreement regarding the consideration of the structure for a collaboration, a joint statement said.
Honda Motor Co. and Nissan Motor Corp. announced in December that they were going to hold talks to set up a joint holding company. Mitsubishi Motors Corp. had said it was considering joining that group.
From the start, the effort had analysts puzzled as to the advantages to any of the companies, as their model lineups and strengths overlap in an industry shaken by the arrival of powerful newcomers like Tesla and BYD, as well as the move to electrification.
Honda and Nissan initially said they were trying to finalize an agreement by June and set up the holding company by August.
The three automakers will continue to work together on electric vehicles and smart cars, such as autonomous driving, they said Thursday.
In recent weeks, Japanese media had various reports about the talks breaking down, citing unidentified sources. Some said Nissan balked at becoming a minor player in the partnership with Honda.
Mibe denied he knew or heard anything about the media speculation that Taiwan's Foxconn was considering taking a stake in Nissan.
Honda is in far better financial shape and was to take the lead in the joint executive team. Honda reported Thursday that its April-December 2024 profits declined 7% to 805 billion yen ($5 billion).
Nissan reported a loss for the July-September quarter as its vehicle sales sank, prompting it to slash 9,000 jobs. At that time, Uchida took a 50% pay cut to take responsibility for the results.