Saudi Economy Accelerates as Diversification and Legal Reforms Drive Growth

Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
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Saudi Economy Accelerates as Diversification and Legal Reforms Drive Growth

Quality of life represents a strategic national priority in Saudi Arabia (SPA). 
Quality of life represents a strategic national priority in Saudi Arabia (SPA). 

Saudi Arabia’s economy has undergone nearly a decade of transformation under Crown Prince Mohammed bin Salman, as sweeping reforms and diversification efforts reshape the country’s economic landscape.

Since the launch of Saudi Vision 2030 in April 2016, the Kingdom has embarked on its most significant economic shift in decades. The transformation has extended far beyond fiscal adjustments or limited diversification programs, evolving instead into a broad structural reform aimed at reducing reliance on oil and building a more diverse and dynamic economy.

Economic indicators suggest the strategy is gaining traction. Saudi Arabia’s gross domestic product (GDP) rose from about SAR 2.6 trillion in 2016 to nearly SAR 4.7 trillion in recent years, roughly $1.3 trillion, according to the latest official figures. That represents an average cumulative annual growth rate of about 8 percent, placing the Kingdom among the fastest-growing major economies globally during this period.

The shift reflects Vision 2030’s broader strategy to expand non-oil industries and widen the country’s production base beyond hydrocarbons.

 

Faisal Al-Fadhel, a legal expert in economic legislation and a member of the board of trustees of the Riyadh Economic Forum, said the reforms launched under Crown Prince Mohammed bin Salman have introduced a more diversified and sustainable economic model.

“Saudi Arabia has moved toward reducing its dependence on oil while expanding promising sectors such as tourism, technology, logistics and advanced industries,” Al-Fadhel told Asharq Al-Awsat. “This approach enhances the resilience of the national economy and increases the attractiveness of the Saudi market for both domestic and foreign investors.”

Recent economic indicators support that assessment. Non-oil activities have recorded strong growth, the private sector’s contribution to GDP has expanded, and foreign direct investment inflows have increased. At the same time, Saudi Arabia has improved its standing in global competitiveness indicators, reinforcing its ambitions to become a regional hub for business and investment.

Al-Fadhel noted that the transformation has also been supported by a broad legislative reform agenda designed to modernize the regulatory environment. Key economic and commercial laws — including the Companies Law, Investment Law, and Bankruptcy Law — have been updated, alongside regulations related to corporate governance, investor protection and competition. The reforms aim to improve transparency, regulatory certainty and the efficiency of the investment environment.

Non-Oil Sectors Lead Growth

One of the most visible outcomes of the economic shift is the rising contribution of non-oil sectors, which now account for 56 percent of GDP. Data show that non-oil activities were the primary driver of real economic growth in 2025.

Saudi Arabia ended 2025 with its strongest growth in two years, with GDP expanding 4.5 percent, according to estimates by the General Authority for Statistics (GASTAT). The economy grew 5 percent in the fourth quarter, with all major sectors contributing to the expansion compared with 2024.

Labor Market Changes

The Saudi labor market has also seen notable shifts. Unemployment among Saudi nationals has declined, while female participation in the workforce has reached record levels following a series of labor and regulatory reforms.

More than 2.48 million Saudis have joined the private sector in recent years, reflecting the impact of job localization policies. Economic transformation programs have also generated roughly 800,000 new jobs, with strong growth in engineering professions.

Employment opportunities have expanded particularly in tourism, supported by major entertainment and tourism projects, as well as in the pharmaceutical and medical manufacturing industries, where job numbers have doubled.

Investment at the Center

Investment has become a central pillar of the Kingdom’s economic strategy. Crown Prince Mohammed bin Salman has positioned both domestic and foreign investment as key drivers of growth and diversification.

The government established the Ministry of Investment and launched the National Investment Strategy as a comprehensive framework to boost capital formation. Total investment — measured by fixed capital formation — has risen from about SAR 672 billion in 2017 to roughly SAR 1.44 trillion by the end of 2024, more than doubling in less than a decade.

Al-Fadhel emphasized that the private sector is a critical partner in achieving Vision 2030 goals through expanded investment, technological adoption, innovation, and entrepreneurship.

Public Investment Fund Expands Role

The Public Investment Fund (PIF) has emerged as a central instrument of the transformation. With assets estimated at SAR 3.47 trillion, it has become one of the world’s largest sovereign wealth funds.

PIF is leading major investments in tourism, renewable energy, industry, technology and entertainment while launching large-scale development projects designed to create new industries and strengthen Saudi Arabia’s position as a global economic hub.

 

 



Trump: ‘Time to Teach Canada You Can’t Do This Anymore’

US President Donald Trump speaks as he hosts a back-to-school-themed event to highlight his administration's education policies, in the Rose Garden at the White House in Washington, DC, US, August 24, 2026. (Reuters)
US President Donald Trump speaks as he hosts a back-to-school-themed event to highlight his administration's education policies, in the Rose Garden at the White House in Washington, DC, US, August 24, 2026. (Reuters)
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Trump: ‘Time to Teach Canada You Can’t Do This Anymore’

US President Donald Trump speaks as he hosts a back-to-school-themed event to highlight his administration's education policies, in the Rose Garden at the White House in Washington, DC, US, August 24, 2026. (Reuters)
US President Donald Trump speaks as he hosts a back-to-school-themed event to highlight his administration's education policies, in the Rose Garden at the White House in Washington, DC, US, August 24, 2026. (Reuters)

US President Donald Trump said on Wednesday that it was "time to teach Canada you can't do this anymore," just days after trade talks between the neighboring countries broke down.

"I had a deal, that was a pretty good deal, you know, quite good," Trump told Glenn Beck in an interview.

"They don't have anything that we have to have, okay, we can get by. I mean, there ‌are a ‌couple of things that would make it ‌a ⁠little inconvenient, but we ⁠can get them elsewhere. And it's time to teach Canada you can't do this anymore."

Trump imposed new 50% tariffs on $20 billion of Canadian imports on Saturday after talks between the two countries collapsed.

Canada hit back on Tuesday with retaliatory tariffs on about $20 billion worth of US annual imports ⁠and rolled out aid for businesses and workers, ‌matching Washington's latest duties dollar for ‌dollar.

They take effect on September 8.

Trump also announced 50% ‌tariffs on Canadian autos and parts that will take effect ‌on January 1.

Canada has said that the US refused to extend tariff relief to medium- and heavy-duty vehicles as one reason it did not reach an agreement.

The Canadian Embassy in Washington ‌did not immediately comment on Wednesday.

White House adviser Peter Navarro predicted on Wednesday that the deal ⁠Canada ⁠will ultimately strike with the US will be worse than what was offered last week.

"It just is not going to end well for Canada and I predict that the deal you got, that you turned your nose up, you're never going to get that deal again," Navarro said on C-SPAN. "Whatever you get is going to be less than that."

Navarro added that the US deal offered to Canada "made me uncomfortable" given how advantageous he thought it was for the US' northern neighbor.

"There's no way economically they should have turned it down," Navarro said.


Behind the Sun and Wind, Saudi Arabia Invests in 'Stored Energy'

“Bisha Battery Energy Storage Project” (Saudi Ministry of Energy)
“Bisha Battery Energy Storage Project” (Saudi Ministry of Energy)
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Behind the Sun and Wind, Saudi Arabia Invests in 'Stored Energy'

“Bisha Battery Energy Storage Project” (Saudi Ministry of Energy)
“Bisha Battery Energy Storage Project” (Saudi Ministry of Energy)

As solar and wind projects reshape Saudi Arabia's energy landscape, a new market is taking shape, focused on electricity storage. As reliance on renewable energy sources expands, batteries are emerging as a critical component of the system, storing electricity when it is available and feeding it back into the grid when demand rises.

This shift is not limited to adding a new technology to the power sector. It is gradually establishing a standalone investment activity in which batteries are evolving from a supporting solution for renewable energy projects into part of the infrastructure needed to manage electricity and enhance grid flexibility and reliability.

Saudi Arabia is taking another step in this direction with the Saudi Power Procurement Company signing four agreements for independent battery energy storage projects, with a total capacity of 2,000 megawatts for four hours and investments exceeding 4.35 billion riyals ($1.16 billion). The agreements were signed in the presence of Prince Abdulaziz bin Salman, Minister of Energy, Minister of Industry and Mineral Resources, and Chairman of the company's board of directors.

Four Projects Shaping the Storage Market

The first group includes three projects signed with a consortium comprising Saudi Energy Company, ACWA Power, and Al Sharif Contracting and Commercial Development. The projects are Al Muwayh and Hadn in Makkah Province, and Al Kahfa in Hail Province, each with a capacity of 500 megawatts for four hours.

The group also includes the Al Khashibi project in Qassim Province, with the same capacity. Its agreement was signed with a consortium comprising ENGIE and Alhaj Abdullah Ali Reda & Co. Ltd.

These projects are part of the first group of energy storage projects being developed under a build, own and operate model, as part of the energy sector's efforts to enhance the reliability and efficiency of electricity generation in Saudi Arabia.

"Storage" Strengthens Renewable Energy

In an analysis of the project, Dr. Mohammed Al-Sabban, a former senior adviser to the Saudi oil minister, told Asharq Al-Awsat that this approach addresses the energy sector's needs for the next phase, amid the rapid expansion of renewable energy sources.

He explained that battery energy storage is a key driver in strengthening the role of renewable energy sources, particularly solar and wind, within Saudi Arabia's electricity generation system.

Al-Sabban said the importance of storage stems from the nature of renewable energy sources, as the energy they generate is typically available within a limited period of no more than four hours. Storing this energy in batteries therefore plays an important role in extending the period during which it can be used and making it available to meet electricity sector needs at later times.

He noted that the current capacity, despite its importance, remains insufficient on its own given weather fluctuations and the limited period during which solar energy can be utilized, particularly after sunset. This further underscores the importance of these projects in the next phase to improve the efficiency of renewable energy utilization.

"Storage" Reshapes the Electricity System

Financial and economic adviser Dr. Hussein Al-Attas told Asharq Al-Awsat that signing these agreements simultaneously carries an important message: Saudi Arabia is no longer viewing renewable energy simply as an addition of new generation capacity. Instead, it is moving toward building an integrated electricity system encompassing generation, storage, load management, and improved grid reliability.

He explained that storage is the link that transforms solar and wind from intermittent sources into resources that can be managed and utilized when needed. He considers this a sign of greater maturity in the power sector, particularly given the targeted expansion of renewable energy sources.

These projects also contribute economically by improving the utilization efficiency of electricity assets and reducing the need to build conventional capacity that operates only during peak hours, while also enhancing grid stability. The value, he stressed, lies not only in the batteries themselves, but in the flexibility they add to the entire power system.

Billions Offer an Opportunity for Local Content

Al-Attas said the value of the contracts represents a good opportunity for local content, while emphasizing the need to distinguish between battery manufacturing itself and the rest of the value chain. He expects opportunities in the initial phase to focus on civil, electrical, construction, installation, operations, and maintenance work, in addition to some assembly and supporting systems, while cells and advanced battery technologies will initially remain more dependent on imports.

He stressed that the more important economic factor is the size of the future market. Saudi Arabia's emergence as a large and stable market for energy storage projects could create a genuine incentive to localize assembly plants, followed by some components and potentially broader manufacturing later. Industry does not move into a market simply because one or two projects exist, he noted, but when it sees sustained demand and clear economic scale. This highlights the importance of maintaining Saudi Arabia's storage program.

A Standalone Investment Asset

Al-Attas believes these projects represent an important step toward treating energy storage as an independent investment asset class rather than simply a component of a solar or wind power plant.

He explained that the presence of 15-year long-term contracts, a clear contractual structure, and predictable cash flows makes this type of asset more attractive to investors and project financiers.

He noted that storage's appeal compared with conventional generation plants lies in the different service it provides, namely flexibility and the ability to supply energy when it is needed. Compared with renewable energy projects, storage addresses one of their biggest challenges: the mismatch between the timing of generation and the timing of demand.

ACWA Expands Its Presence in Energy Infrastructure

ACWA Power stands out as one of the key parties in the three projects in Makkah Province and Hail, with a stake of approximately 35 percent. Al-Attas sees this as reflecting a move toward building a broader portfolio of energy infrastructure assets rather than focusing solely on electricity generation projects.

Through these projects, Saudi Arabia aims to increase the share of renewable energy and energy storage systems in its energy mix to around 50 percent by 2030, in line with growing electricity demand and in a way that contributes to enhancing the reliability, efficiency, and operational flexibility of the system.

The Saudi Power Procurement Company, in its capacity as the "principal buyer," is responsible for preparing preliminary studies and tendering electricity generation and energy storage projects, as well as signing power purchase agreements and energy storage service agreements with the developer consortia.

The reshaping of the electricity system is not limited to adding storage capacity. The move coincides with parallel efforts to strengthen the grid infrastructure itself to keep pace with the expected expansion of new generation sources. Saudi Energy Company has signed a cooperation agreement with Bpifrance to finance electricity grid development and expansion projects and provide financing solutions for the company's procurement and infrastructure projects.

The agreement was signed during the Saudi-French Investment Roundtable in Paris, coinciding with the official visit of Prince Mohammed bin Salman, Crown Prince and Prime Minister of Saudi Arabia, to France.

The agreement builds on a previous memorandum of understanding to establish a financing facility worth up to $3 billion, aimed at supporting the procurement program and electricity infrastructure projects, including equipment related to grid stability.

Ultimately, the picture taking shape today is not just about batteries. It is about what Saudi Arabia's electricity system could become in the coming years: solar and wind generating electricity, batteries storing it, and a grid better equipped to transmit and manage it when needed. Between these components, a new market is taking shape that could become one of the energy sector's most prominent investment stories in the next phase.


Mawani Adds 'RC2' Shipping Service to Jeddah Islamic Port

Mawani Adds 'RC2' Shipping Service to Jeddah Islamic Port
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Mawani Adds 'RC2' Shipping Service to Jeddah Islamic Port

Mawani Adds 'RC2' Shipping Service to Jeddah Islamic Port

The Saudi Ports Authority (Mawani) has added the "RC2" shipping service, operated by Ocean Network Express (ONE), to Jeddah Islamic Port, enhancing maritime connectivity between Saudi Arabia and the world, while reinforcing the port's growing competitive advantage and operational efficiency.

The new shipping service strengthens Jeddah Islamic Port's connections with the Chinese ports of Shanghai, Ningbo, and Nansha, as well as Aqaba in Jordan and Sokhna in Egypt, deploying vessels with a capacity of up to 1,643 twenty-foot equivalent units (TEUs).

The move is part of Mawani's efforts to improve Saudi Arabia's ranking in global performance indicators and support the flow of national exports.

Jeddah Islamic Port is an important logistics and commercial hub on the Red Sea coast. It covers an area of 12.5 square kilometers and has 62 berths, along with several specialized terminals and advanced facilities.

The port also has a number of berths for marine services, such as mooring and pilotage, and fully equipped halls for receiving pilgrims and visitors.