Saudi economy makes speedy turnaround
▶ Reforms to attract tourists cap an extraordinary year in the kingdom’s history
At the end of 2015, Saudi Arabia launched an austerity programme as it sought to control a deficit caused by falling oil prices. The move drew mixed responses from observers of the kingdom, but as 2017 comes to a close, the man behind the reforms, Crown Prince Mohammed bin Salman, has been vindicated. As The National reported this week, Saudi Arabia’s budget deficit narrowed over this year to below 10 per cent of GDP for the first time since oil prices began to drop. Buoyed by this, the Arab world’s largest economy has unveiled an ambitious expansionary budget for 2018. Spending will rise to a record 978 billion riyals ($261 billion) from this year’s 926 billion riyals. The plan is to stimulate economic activity, but what is particularly striking is that a substantial portion of that spending will be financed with revenues from non-oil sources.
This budget is yet another concrete expression of Prince Mohammed’s Vision 2030 programme, a comprehensive reform agenda that seeks to overhaul and diversify the kingdom’s economy and transform the country. These pages have previously written about Prince Mohammed’s remarkable receptiveness to the needs of his country’s youth, but even that commentary probably undersells the swift and comprehensive changes he has sought to make.
This has been a revolutionary year in Saudi Arabia’s history. A young Saudi citizen at the start of this year had few avenues for entertainment. If the citizen happened to be female, she couldn’t drive and needed the approval of a male relative to obtain certain services. The neediest of Saudi Arabian families had no means of protecting themselves from the impact of spending cuts. Their nation’s heritage was largely sealed off from the world and the large coastline on the Red Sea seemed destined to remain a barren tract of sand.
Come next year, all of this changes. For the first time, Saudi Arabia’s youth can choose from a menu of entertainment options: the kingdom will have a city devoted to it. Cinemas will soon reopen and Saudi roads will feature female drivers, whose participation in public life, thanks to Prince Mohammed’s push, will not only improve the quality of life for half the nation’s citizens but also boost the economy. Workers affected by spending cuts will henceforth be protected by a cash transfer programme. Work will begin on the Red Sea coast to turn it into one of the world’s most luxurious tourist destinations. Then there is Neom, a $500 billion city of the future.
The country will also now be accessible to tourists. Prince Mohammed’s decision to liberalise restrictions on visitors and grant tourist visas, announced this week, will open up the kingdom to the world. Saudi Arabia has often been misunderstood and misrepresented in the past. This year has marked the beginning of the nation’s energetic thrust into the future.