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The economic pace in the Middle East and worldwide is increasingly being set in the Saudi capital Riyadh.
Jean Claude RaemyEditor Economics
The corona pandemic has had a lasting impact on the economy of almost all countries. In the last three years, however, one country has made a name for itself with massive investments and an ambitious vision for the future: Saudi Arabia.
This future strategy, formulated in 2016, is called “Vision 2030”. Their basic goal is to lead the country out of its dependence on oil and gas. As long as the money is still flowing in this sector, it will be invested in the country’s transformation. This change encompasses both the increasingly diversified economy and Saudi society as a whole.
The core initiatives make it clear where the country is headed. These are:
tourism and urban development
So far, Saudi Arabia has mainly received millions of Islamic pilgrims who undertake the religiously prescribed trips to Mecca or Medina. In the future, millions of non-Muslim tourists will also visit the country. The island of Sindalah, the Trojena ski arena and other elements of the Neom mega-project on the Red Sea should ensure this.
Futuristic cities are also being created as part of Neom, such as The Line or the technology city of Oxagon. Already finished: The capital Riyadh has received a new quarter called Diriyah Gate for 20 billion dollars, which is intended for both locals and tourists.
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privatization, SMEs and education
Notable is the transition from a centralized model to an entrepreneur-led economy. Various, but by no means all, state assets and services are being privatised. This should improve the quality and efficiency of public services. Interesting: With the IPO of part of the state oil producer Saudi Aramco, money will be raised to promote SMEs. Their share of GDP is set to rise from the current 20 to 35 percent.
The focus of energy production is shifting towards renewable energies. In addition, Saudi Arabia is modernizing its educational and healthcare facilities. The latter also helped the country weather the Covid crisis well.
Improvement of the transport infrastructure
Saudi Arabia is investing a good 133 billion dollars in improving ports, roads and railway lines. 8,080 kilometers of new railway lines better connect port cities and the interior of the country. In air traffic, the capital Riyadh and the coastal city of Jeddah want to be important hubs.
The state airline Saudia is expanding consistently. She has been flying to Geneva for years, and to Zurich since 2022. From February 3, she will also be flying from Zurich to Jeddah.
Saudi Arabia wants to be a tech hub. Saudi Communications and IT Minister Abdullah Al-Swaha said at the WEF in Davos: “We want to play a leading role in connecting the entire world to the Internet.” The world is still too fragmented in terms of technological equipment. According to him, Saudi Arabia has already invested half a trillion dollars in setting up powerful satellite-based networks.
Mines instead of derricks: the mining industry has taken center stage. Saudi Arabia has seven percent of the world’s phosphate reserves and produces significant amounts of bauxite, gold, copper and zinc.
“Vision 2030” wants to promote “the number and variety of cultural and entertainment activities”. This explains the commitment to sports in the country. There have been Formula 1 races in Jeddah since 2021. There are also sporting events from the fields of tennis, wrestling, golf, horse racing and football – the finals of the Italian and Spanish Supercups have already been held in Saudi Arabia. However, the declared long-term goal is to host mega-events such as the World Cup or the Olympic Games. Curious: In 2029 the Asian Winter Games will be held in Saudi Arabia, in the ski resort of Trojena.
Praise and criticism side by side
Kristalina Georgieva (69), Managing Director of the International Monetary Fund, attests that Saudi Arabia has made “impressive progress” in implementing all of these initiatives as part of the WEF. In view of many weakening national economies, growth-oriented Saudi Arabia is needed more than ever for the global economy. The country plays an important role in the security of the energy supply or, as a phosphate producer, also for the food supply.
If you take the amount and amount of investments as a benchmark, Saudi Arabia is definitely a «country in the fast lane». At the WEF there was also a lively discussion about the growing inclusion of women in the country. The country’s first ambassador, Reema Bandar al Saud, says that equal pay is already a fact and that 35 percent of employees are women.
But this should be taken with caution. The ambassador herself comes from the royal family. And the desired improvement in women’s rights and the Sharia practiced in the country are not really compatible.
In any case, given the country’s dubious human rights record, the feedback isn’t all euphoric. The Saudi National Bank’s entry into Credit Suisse in Switzerland drew numerous critics to the scene. China is also the country’s largest trading partner.