Saudi Arabia's Diversification Drive Shows Signs of Success

Saudi Arabia's non-oil sector has shown resilience in the face of global uncertainties and rising regional costs, driven by increasing investment, tourism, employment, and private sector participation.

The country's Vision 2030 initiative, launched a decade ago, aims to create a more diversified economy that can withstand global changes. Data from the second quarter of 2026 shows real GDP contracting 4.7% year-on-year due to a 24.8% decline in oil activities.

However, non-oil activities and government activities grew by 0.9%, cushioning the impact of lower oil prices on the overall economy. The tourism sector is a notable example of this diversification, with 123 million domestic and international tourist visits in 2025, generating total expenditure of SAR303.7 billion.

The labor market has also seen significant changes, with the unemployment rate among Saudi nationals falling from 12.3% in 2016 to 7.2% by the end of 2025, approaching the Vision 2030 target of 7%. The government aims to continue this transformation, investing in human capital, infrastructure, and technology to create a more interconnected economic system.