The International Monetary Fund (IMF) has lauded Saudi Arabia’s tourism sector as a key player in the country’s economic diversification, as highlighted in its 2024 Article IV Consultation report. The report notes the success of Saudi Arabia in surpassing the Vision 2030 target of attracting 100 million visitors annually by 2023, seven years ahead of schedule. Tourism revenues in 2023 reached $36 billion, with net tourism income experiencing a significant increase of 38 percent. The sector’s direct and indirect contribution to GDP reached 11.5 percent in 2023, with expectations to grow to 16 percent by 2034. This growth has been driven by strong domestic demand and an increase in international arrivals, with non-religious tourism experiencing a surge, particularly in leisure travel and visits to friends and relatives.
The IMF report emphasizes the role of tourism in transitioning Saudi Arabia’s service balance to a surplus, indicating that the Kingdom is now earning more from international visitors than it is spending on outbound tourism. By 2022, this shift had already resulted in a positive balance, and 2023 saw further gains through increased revenue from transportation and service exports. Despite a decline in outbound tourism spending by Saudi nationals, expatriates living in the Kingdom have significantly increased their leisure spending post-COVID. The diverse linkages created by Saudi Arabia’s tourism sector with various industries such as food, beverage, travel, cultural industries, and accommodation are vital in reducing the country’s reliance on oil-intensive sectors.
The report also highlights the significant role of major giga projects like Red Sea Global and Diriyah Gate in driving this shift, as they focus on luxury tourism, culture preservation, and infrastructure improvements. Vision 2030 continues to be Saudi Arabia’s comprehensive economic reform plan, with tourism at its core. The IMF’s recognition of Saudi Arabia’s progress in the tourism sector reflects the immense potential of this industry to drive sustainable economic growth in the coming years. The country’s success in diversifying its economy through tourism is evident, with the sector playing a crucial role in bringing in revenue from international visitors and reducing the reliance on traditional oil-dependent industries.
The success of Saudi Arabia in exceeding its tourism targets ahead of schedule demonstrates the effectiveness of its strategies in promoting the sector. The growth in non-religious tourism, particularly fueled by major international events like Formula One, the 2027 Asian Cup, and the 2030 World Expo, has contributed significantly to the sector’s expansion. The IMF report recognizes the positive impact of these events in driving tourism revenues and increasing the overall contribution of the sector to the country’s GDP. The Kingdom’s ability to attract a diverse range of visitors both domestically and internationally has played a key role in driving the growth of the tourism sector and establishing it as a major contributor to economic diversification.
As Saudi Arabia continues to invest in major tourism projects and infrastructure improvements, the sector’s contribution to the country’s economy is expected to further increase. The diversified linkages created by the tourism sector with other industries are essential in reducing the dependence on oil revenues and promoting sustainable economic growth. The recognition of Saudi Arabia’s progress in the tourism sector by the IMF underscores the country’s potential to establish itself as a prominent player in the global tourism market. With Vision 2030 guiding the country’s economic reforms, the future looks promising for Saudi Arabia’s tourism sector, with the capacity to drive sustainable economic growth and contribute significantly to the country’s overall economic development.
