How well is Saudi’s diversification strategy working?
It has been well under a month since the driving ban was lifted for Saudi women; and with the Kingdom pushing new heights, it is to no one’s surprise that the Saudi economy, which contracted by 0.9% last year, is now forecast to grow by 1.9% in 2018, according to The International Monetary Fund (IMF).
But is this new forecast driven by oil?
Saudi Arabia is a new country altogether and is shaping the future while also laying a foundational path for other oil-obsessed Arab countries to follow.
Shifting away from oil
From driving to now flying, Saudi women are taking to the skies.
Oxford Aviation Academy, a flight school in Dammam, is now accepting women students to incorporate them into the Saudi Arabian aviation economy.
“People used to travel abroad (to study aviation), which was difficult for women more than men,” Dalia Yashar, one of the first Saudis who registered to become a commercial pilot, said at King Fahd International Airport in Dammam. Saudi women can pursue their career as commercial pilots, Reuters reported.
“We are no longer living in the era where women were allowed (to work) in limited areas. All avenues are now opened for women. If you have the appetite, you have the ability,” she said.
Oxford Aviation Academy, a leading trainer and crew recruiter, has already received applications from hundreds of women hoping to start lessons this September at a new branch in the eastern city of Dammam.
The academy is part of a $300 million project that includes a school for aircraft maintenance and an international centre for flight simulators at the airport.
Women’s engagement in the job industry is just another step leading to Saudi Arabia’s shift from oil.
Another step is entertainment.
Entertainment is growing
VOX Cinemas just announced that Jeddah Red Sea Mall was selected as a part of the company’s $500 million investment plan, which will deliver approximately 600 screens to the kingdom over the next five years, VOX stated.
The mall has 145,000 sqm of the Gross Leasable Area (GLA), which is projected to hit 18.5 million visitors by the end of 2018.
The announcement marks a major milestone for the company, as it begins to deliver on its goal of bringing entertainment to cities across the Gulf’s Kingdom.
The Cineplex company will also be opening an IMAX theatre at the Red Sea mall, featuring the largest IMAX screen in Saudi Arabia.
Oil still gold?
Back in Riyadh, the Kingdom isn’t just serious about turning the economy head over heels and moving away from oil, but is also giving a chunk of its black gold away next year, according to Larry Fink, Head of the world’s biggest asset manager, Blackrock.
The Kingdom has estimated that the much-anticipated listing of the world’s top oil company could be worth up to $2 trillion, according to CNBC. Saudi Aramco is looking to list a 5% stake worth $100 bn, a strong move towards diversification away from oil.
So does this mean…
… no more oil?
Fink is confident about the future of the Saudi market, following a visit to the Kingdom.
On Monday, the IMF raised its growth forecast for the world’s top crude exporter Saudi Arabia, citing the change to higher oil prices.
But the most recent report shows that oil revenues, which made up 87% of state income according to Forbes, have now dropped to 70%, according to IMF, leaving the rest for non-oil countries.
Riyadh-based Jadwa Investment estimated that Saudi Arabia would boost its oil output to 10.3 million barrels per day for 2018, up from 9.9 million bpd for the first six months.
This will sharply cut Saudi Arabia’s budget deficit to approximately $30 billion from the projected $52 billion, Jadwa said in a report released last week.