The economic indicators tell the story. The kingdom’s ambitious economic transformation is continuing at a steady pace, with non-oil growth rising, driven forward by tourism and digital services. Nada Alameddine, managing partner at Hodema Consulting Services, digs into the data to analyze the largest Gulf nation’s recent achievements and goals.

Another year and Saudi Arabia has taken another step forward in the economic overhaul it has planned and funded in recent years. Oil revenues continue to decrease, falling in 2024 to 4.5 percent of real GDP. Meanwhile, non-oil industries and government activities are moving forward, with growth rates of 4.3 percent and 2.6 percent respectively, according to the kingdom’s General Authority for Statistics.

Positive economic indicators

Overall, the economy expanded by 1.3 percent in 2024, rebounding from the 0.8 percent contraction witnessed the previous year. Significantly, this increase gained momentum through an acceleration in the fourth quarter. GDP rose 4.5 percent year-on-year (y-o-y) in Q4, marking the highest quarterly increase in two years.

These figures reflect the first effects of the authorities’ diversification efforts. Significantly, the non-oil sectors played a key role in softening the impact of declining oil prices and their volatility. Wholesale, retail, restaurants and hotels delivered the best performances, followed by financial services and insurance. At the other end of the spectrum, crude oil and natural gas activities declined by 6.4 percent. However, they still accounted for 22.3 percent of GDP.

Still, the progress of its megaprojects and, specifically, declines in foreign direct investment (FDI), remain the government’s primary concern. Inflows fell in 2024 for a third consecutive year, prompting the country to issue debt to fulfill its short-term financing needs. The authorities have already scaled back the megacity Neom, reducing resident numbers from a planned 1.5 million to 300,000. Additionally, only 2.4 kilometers of the 170-kilometer development will now be completed by 2030.

Tapping into the digital boom

To boost its economic diversification efforts, the country has added another strategic element to its portfolio. Digital services are booming throughout the kingdom, reaching 15 percent of GDP in 2024, according
to the Ministry of Communications and Information Technology. The government has thrown its weight behind data centers and AI-based initiatives, investing over SR 55 billion in the sector.

The kingdom’s data center capacity rocketed last year, increasing by 42 percent to 290.5 megawatts. In parallel, 2024 also saw the launch of the state-backed company Humain. The initiative will lead national efforts to position Saudi Arabia as a global AI hub. The number of technology jobs has also increased dramatically, reaching 381,000 in 2024. Importantly, women now make up 35 percent of the workforce, up from 7 percent in 2018.

A global destination

However, tourism continues to be the cornerstone of the country’s economic diversification plans. The kingdom has invested billions in infrastructure since launching Vision 2030 nine years ago and opening its borders in 2019. Once known as a destination for religious tourists from Muslim nations, Saudi Arabia is now one of the 10 most-visited countries globally. Crucially, this major transformation has taken place in a relatively short space of time.

The kingdom registered 30 million international tourists in 2024. This figure rose to 115 million with domestic visitors added, easily surpassing the 100-million goal set in Vision 2030. However, the authorities are not standing still. Ahmed Al-Khateeb, minister of tourism, wants tourism to be the highest contributor to the economy by 2030, alongside oil. His targets, which he set out recently, include increasing international visitor numbers to 50 million.

Currently, visitors of 66 nationalities can visit the kingdom – many with electronic visas. In just a few years, the number of employees working in tourism has risen to 966,500. The sector now accounts for 7 percent of the overall workforce, up from 2 percent. Significantly, women are playing an increasingly important role across the industry.

Natural and manmade attractions

The kingdom offers a multitude of diverse attractions for visitors. Natural wonders include the spectacular mountain range of Asir, hundreds of kilometers of desert and the Red Sea. The country now boasts eight UNESCO heritage sites, all of which are of historical significance. Meanwhile, the AlUla ruins are generating significant interest among visitors. Mainstays of the kingdom’s offering include the holy cities of Makkah and Madinah, which continue to attract millions annually.

Some sites can even be explored from the comfort of the home. A program launched in 2022 offers experiences to visitors through virtual and augmented reality technologies. Furthermore, the authorities have been working extensively to attract new potential visitors. Last year they launched three campaigns: ‘The Land is Calling,’ targeting European countries, alongside Indian and Chinese PR initiatives.

Lift-off for airport expansion

Increasing airport traffic capacity represents a cornerstone of this expansion. Al Hail’s extension will increase its capacity so it can accommodate 2.2 million passengers. Additionally, two new projects are planned at King Salman International Airport in Riyadh and Abha. The goal is to raise capacity collectively across all airports to 330 million passengers by 2030, up from 112 million in 2023. Connectivity is also crucial, with a target set of 250 destinations. Additionally, the kingdom has announced the planned launch of two additional airlines; Riyadh Air and NEOM.

Room numbers rising fast

In terms of accommodation, hospitality capacity now stands at 476,000 units countrywide. However, Al-Khateeb wants to see this figure doubled over the next 10 years. Accor has recently signed a memorandum of understanding to seal its partnership with the Saudi Tourism Authority.

The European line already operates 45 hotels through 15 brands. It has now announced a 44-project pipeline which will bring the total number of rooms available to 28,000. Meanwhile, Hilton’s projects include 77 hotels in the country, a record, with 20 already operational.

Large-scale developments continue to take shape, including Neom’s Sindalah Island, Diriyah Gate and four resorts at The Red Sea. Red Sea Global is set to develop 16 establishments, while Amaala plans an additional 12 properties. Most of these brands belong to the high-end segment, alongside major international names now established in the kingdom. The Ministry of Tourism has therefore called for the development of more affordable accommodations to balance the offering.

A full calendar

Events are key to attracting visitors all year round. Saudi Arabia has now established itself as a host of international festivals, conferences and sports competitions. On top of its yearly popular ‘Season’ festivals and a string of sports events, the kingdom is preparing to host the second Olympic Esports Games in 2027 and the FIFA World Cup in 2034. This symbolic step into the coveted club of the top sports nations could lead to long-term economic growth. Entertainment attractions, such as aqua parks and indoor game parks, are also attracting locals from across the country.

However, although these high-profile events make the headlines, religious visitors account for the vast majority of travelers. Vision 2030 is also addressing the pilgrimage experience, to make it more accessible, simple and safe. The Makkah Route initiative, for example, has proved highly popular with visitors. Fast-tracking visa issuance was used by 322,900 pilgrims in 2024, marking a steep increase from just 1,700 in 2017. The Nuuk platform also helps with planning the trip. Many new roads and trains have been put in place as well to help pilgrims travel between sites.