Wael’s view
Saudi Arabia’s Vision 2030 has transformed the kingdom’s economy. The non-oil sector now accounts for more than half of GDP, women’s workforce participation has surged, and Saudi Arabia has hosted global summits and brokered diplomatic negotiations. The kingdom’s credit rating is now on par with Japan’s, signaling confidence in its fiscal discipline and structural reforms.
Yet, the scale and speed of change comes with risks.
Saudi Arabia faces two major economic pressures: falling oil prices and rising national debt. Together, they can constrain government spending, delay infrastructure projects, and complicate budget management, especially amid sluggish global growth. Add to that soaring real estate and equity prices, dependence on foreign professionals — which fuels inflation—and the overall cost of working, living, and doing business in Saudi Arabia, and some of the benefits of the expansion are being eroded.
Despite these challenges, Saudi Arabia remains committed to its ambitious plans. Megaprojects tied to Vision 2030, Expo 2030, and men’s soccer World Cup 2034 remain top priorities, but if budget constraints persist, other sectors could feel the strain. The kingdom’s sovereign wealth fund is reportedly considering raising debt in Europe and the US this year and encouraging its portfolio companies to borrow independently.
Many firms, particularly those working on government contracts, report longer payment cycles, leading to liquidity concerns for suppliers that could ripple across the private sector. A small, local vendor, owed a few millions dollars from a public sector company, shut down because it couldn’t fund its operations long enough to get paid. These cases are rare but chilling for Saudis looking to start firms, or for foreign firms coming to the country. Real estate, construction, and consulting firms — key players in Saudi Arabia’s transformation — are reassessing their exposure to public spending.
These challenges don’t diminish the extraordinary progress achieved under Vision 2030, but to sustain this momentum, Saudi Arabia needs to provide a clear and structured roadmap that balances fiscal discipline with economic expansion.
The Ministry of Finance and the Expenditure and Projects Efficiency Authority are prioritizing high-return projects while implementing a measured approach to government spending. This must be carefully managed to sustain business growth. Complementing these efforts, strengthening regulatory frameworks to enhance private sector growth and reduce reliance on public funding will be critical for long-term economic sustainability.
Diversification remains the kingdom’s best bet to drive the transformation. Tourism, logistics, and technology have shown promise, but they need investment and policy support to mature into stable economic pillars. Tightening monetary policy to control inflation, ensuring foreign labor inflows are balanced with job creation for Saudis, and maintaining currency stability are also key priorities. Setting clear timelines and mechanisms for government payments to contractors will help restore business confidence and prevent liquidity shortages.
Vision 2030 has already exceeded expectations. But to secure its long-term impact, Saudi Arabia must now show it can manage the risks that come with ambition. The world is watching, and how the kingdom navigates this next phase will define its economic legacy.
Wael Mahdi is an independent commentator specializing in OPEC and Saudi Arabia’s economy, and co-author of “OPEC in a Shale Oil World: Where to Next?”