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.

 

 



India Says Will Keep Expanding Oil Refining Capacity

File photo: Storage tanks of an oil refinery of Essar Oil, which runs India's second biggest private sector refinery, are pictured in Vadinar in the western state of Gujarat, India, October 4, 2016. REUTERS/Amit Dave/File photo
File photo: Storage tanks of an oil refinery of Essar Oil, which runs India's second biggest private sector refinery, are pictured in Vadinar in the western state of Gujarat, India, October 4, 2016. REUTERS/Amit Dave/File photo
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India Says Will Keep Expanding Oil Refining Capacity

File photo: Storage tanks of an oil refinery of Essar Oil, which runs India's second biggest private sector refinery, are pictured in Vadinar in the western state of Gujarat, India, October 4, 2016. REUTERS/Amit Dave/File photo
File photo: Storage tanks of an oil refinery of Essar Oil, which runs India's second biggest private sector refinery, are pictured in Vadinar in the western state of Gujarat, India, October 4, 2016. REUTERS/Amit Dave/File photo

India will continue to build new crude oil refineries in order to ensure supply chain security even as Western nations shut processing units, Prime Minister Narendra Modi said.

“No new refinery has come up in the US in the last five decades and capacity in Europe has also been constantly declining,” Bloomberg quoted Modi as saying on Saturday, as he inaugurated the country’s first new refinery in a decade. He said India will continue to expand capacity.

The 180,000-barrels-a-day greenfield refinery in the heart of Rajasthan’s Thar desert, which has 2.4 million tons a year of petrochemical capacity and was built at a cost of $8.3 billion, is likely to be the only new refinery commissioned globally this year, according to BloombergNEF analysts.

The facility expands India’s refining capacity at a time when much of the West is shutting plants and investment elsewhere has slowed, highlighting New Delhi’s strategy of betting that robust domestic fuel demand, slower-than-expected electric-vehicle adoption and exports of refined products will continue to justify billions of dollars in new oil-processing infrastructure.

Meanwhile, traders have sold gasoline produced by Indian refiner Nayara Energy to Russia, which is grappling with fuel shortages triggered by Ukrainian attacks on its energy infrastructure, two sources with direct knowledge of the matter said on Thursday.

Reuters reported on Wednesday that Russia had begun seaborne imports of gasoline from India, without naming the supplier.

Reuters said that at least ⁠60,000 ⁠metric tons of gasoline had been dispatched from India to Russia, citing an industry source, with another source saying that two tankers, carrying 30,000 to 40,000 tons each, had been sent.


Egypt Expects €1.5 billion from EU Assistance Package in Coming Days

The Central Bank of Egypt in downtown Cairo (Asharq Al-Awsat)
The Central Bank of Egypt in downtown Cairo (Asharq Al-Awsat)
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Egypt Expects €1.5 billion from EU Assistance Package in Coming Days

The Central Bank of Egypt in downtown Cairo (Asharq Al-Awsat)
The Central Bank of Egypt in downtown Cairo (Asharq Al-Awsat)

Egypt expects to receive €1.5 billion ($1.72 billion) from the European Union in the coming days, the first of two remaining tranches of a €5 billion macro-financial assistance package, Foreign Minister Badr Abdelatty said on Saturday.

Speaking at a press conference in Egypt's new administrative capital alongside European Commissioner for the Mediterranean Dubravka Suica, Abdelatty said the outstanding €3 billion would be disbursed in two equal tranches of €1.5 billion each, Reuters reported.

He said Cairo hoped the last payment would be transferred by the start of the autumn.

The EU has so far disbursed €2 billion of the package, having transferred an initial €1 billion tranche in January 2025 and a second €1 billion earlier this year.

The macro-financial assistance forms part of a broader €7.4 billion funding deal the EU announced in 2024, which also includes €5 billion in concessional loans.


Saudi Hospitality Boom: 50 Global Brands Race Ahead with $120 Billion in Investments

Jeddah Corniche stands out as one of the Kingdom's premier destinations for landmark tourism and hospitality developments (SPA).
Jeddah Corniche stands out as one of the Kingdom's premier destinations for landmark tourism and hospitality developments (SPA).
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Saudi Hospitality Boom: 50 Global Brands Race Ahead with $120 Billion in Investments

Jeddah Corniche stands out as one of the Kingdom's premier destinations for landmark tourism and hospitality developments (SPA).
Jeddah Corniche stands out as one of the Kingdom's premier destinations for landmark tourism and hospitality developments (SPA).

Saudi Arabia continues to cement its position as one of the fastest-growing hospitality markets in the region and the world, driven by the rapid expansion of mega tourism projects and emerging destinations. This momentum is prompting the world's leading hotel companies to accelerate their investments and launch unprecedented projects across the Kingdom.

During the first half of this year, Saudi Arabia's hospitality sector continued to attract major investments, with leading international hotel groups announcing new hotel openings and signing record expansion agreements across the Kingdom's cities and flagship developments.

This activity coincides with Saudi Arabia maintaining the largest hotel pipeline in the Middle East, driven by pioneering destinations such as NEOM, the Red Sea, Qiddiya, and Diriyah, alongside continued growth in Riyadh, Makkah, and Madinah.

An Asharq Al-Awsat review found strong alignment between the expansion plans of these hospitality brands and the objectives of Saudi Vision 2030. According to the latest Ministry of Tourism data, more than 50 global hospitality brands are expanding in the Kingdom through investments exceeding $120 billion, with plans to add more than 200,000 new hotel rooms. The private sector plays a pivotal role, contributing around 50 percent of these investments to meet growing demand and cater to the diverse preferences of travelers, from luxury hotels and coastal resorts to heritage and rural accommodations.

In this context, investors and tourism industry experts said the momentum reflects a qualitative transformation that is enhancing service standards and strengthening competitiveness, supported by an attractive investment environment and flexible regulatory frameworks that have successfully streamlined the investment journey for both foreign and domestic investors.

Global Investments

At the beginning of 2026, Marriott announced an agreement to add five new hotels in Jeddah, Makkah, and Madinah, providing more than 2,700 rooms.

Sofitel, the French luxury hospitality brand owned by Accor, also announced the official opening of the Sofitel Riyadh Hotel & Convention Center.

Knowledge Economic City also announced a DoubleTree by Hilton hotel, the first property within the city's master plan. Designed to offer a new level of comfort and connectivity in Madinah, the project comes as Red Sea Global recently officially opened the SLS Red Sea Resort on Shura Island, marking the brand's first property in the Kingdom. The resort features 150 luxury accommodations, including guestrooms, suites, and private pool villas, in addition to a full-service spa, a cinema, and a range of vibrant leisure facilities.

Meanwhile, Saudi-based Blacksand and Marriott International signed an agreement to develop 10 new hotels across the Kingdom, adding more than 1,300 hotel rooms over the next four years. The deal reflects the strong momentum in Saudi Arabia's hospitality and tourism sectors in line with the objectives of Saudi Vision 2030.

In April, the King Abdullah Financial District Development and Management Company (KAFD DMC), the entity responsible for managing and operating the district, opened W Riyadh – KAFD, marking the debut of the W Hotels brand in Saudi Arabia.

In the latest of these developments, The Ascott Limited recently announced plans to open Ascott Villas Riyadh in the fourth quarter of 2026. The project will be the company's first villa community in the Kingdom and will comprise 86 villas in Riyadh's Hittin district.

The announcement also reflects The Ascott Limited's broader expansion strategy, as the company seeks to strengthen its presence in the Saudi market as part of its plan to reach 15,000 units across the Kingdom by 2030, capitalizing on the continued growth of the tourism and business sectors in Riyadh and other major cities.

Reflecting the growing appeal of the Saudi market to leading international investors, Dar Global announced a strategic partnership with The Trump Organization to develop Trump International Tower Jeddah. The landmark luxury project, which will feature a five-star hotel and high-end branded residences, underscores the transformation of the Red Sea coastline into a magnet for some of the world's most prestigious hospitality and luxury brands.

A rendering of the new Ascott Villas Riyadh project (Asharq Al-Awsat).

Investor Confidence

Majed Al Hokair, a businessman and investor in the tourism and entertainment sector, told Asharq Al-Awsat that the Kingdom's growing success in attracting global hotel brands reflects a qualitative transformation in its tourism sector.

"The focus is no longer simply on increasing the number of hotels. It is now about building an integrated tourism ecosystem that caters to a wide range of visitor segments," he said.

Al Hokair said the entry and expansion of prestigious international brands in cities such as Riyadh, Jeddah, Makkah, and Madinah reflects investors' confidence in the future of the Saudi market. It also enhances service quality and raises the level of competition, ultimately improving the visitor experience.

He added that tourists' preferences have evolved in recent years, and the Kingdom is increasingly able to meet those changing expectations through a diverse portfolio of hospitality offerings, including luxury hotels, boutique hotels, resorts, rural accommodations, and heritage accommodations, all distinguished by high standards of quality.

National Talent

For his part, tourism investor Nasser Abdulaziz Al Ghaylan told Asharq Al-Awsat that the continued momentum in the entry and expansion of global hotel brands will position Saudi Arabia among the region's leading tourism and investment destinations in the years ahead, particularly with the rollout of major developments such as NEOM, the Red Sea, Qiddiya, and Diriyah, alongside the objectives of Saudi Vision 2030.

Al Ghaylan said the long-term success of these investments will depend on continued investment in developing Saudi talent, enhancing the visitor experience, and providing a diverse and sustainable range of tourism offerings, ensuring balanced growth that further strengthens the Kingdom's position on the global tourism map.

The Ministry of Tourism recently released a report titled Global Investments in Saudi Tourism to coincide with its participation in the Future Hospitality Summit, held in Riyadh from June 22 to 24. The report highlighted the growing interest among international investors in entering the Saudi tourism market and expanding their presence in the Kingdom.

Mövenpick Resort Al Khobar enhances the appeal of tourism destinations along the Eastern Province's coastline (SPA).

The report notes that more than 50 global hospitality brands are expanding across the Kingdom, supported by growing tourism demand and a comprehensive investment environment that has positioned Saudi Arabia as the Middle East's largest tourism market in terms of tourism development projects.

It highlights key indicators reflecting the sector's accelerating momentum, including investments exceeding $120 billion and the addition of more than 200,000 new hotel rooms by 2030, with around 50 percent of those projects expected to be financed by the private sector.

The report also highlights the investment environment underpinning the sector's growth, pointing to significant improvements in the tourism sector's regulatory framework, streamlined licensing procedures, investment incentives, digital services, and business centers that help shorten the investor journey, enhance clarity around regulatory requirements, and facilitate access to the relevant government entities.