16/04/2014 11:57 AST
Kingdom Anticipates Shift from Oil- to Knowledge-Based Economy with Record Non-Oil Exports in 2013 and Development of Economic Cities Record Budgeted Government Expenditure in Healthcare, Education, and Transport in 2014 Budget Drive Economic Diversification
Riyadh, Kingdom of Saudi Arabia: Further progress on economic diversification has the potential to shield the Kingdom from the next economic slowdown, according to key financial players set to attend the 9th Euromoney Saudi Arabia Conference taking place in May 2014.
The steps being taken towards diversification - and the challenges that still remain - will be examined by banking and investment experts attending the event, which is the longest-running, largest and most influential financial conference in the Kingdom.
During the economic slowdown, oil exporters like the Kingdom largely absorbed economic shocks by providing capital and guaranteeing deposits, according to the World Bank.
To shield against any future economic slowdowns, especially if it were to affect oil prices, the Kingdom's leaders are increasing budgeted government expenditure to a record SAR 855 billion in 2014, driving non-oil exports that reached a record SAR 206 billion in 2013, and rapidly developing industry-specific Economic Cities across the Kingdom.
This increased spending is working in parallel with labour-market reform projects initiated by the Ministry of Labour, aiming to increase the number of opportunities for Saudi nationals, and increase the growth rate of jobs available in the private sector.
"The Kingdom is driving economic diversification to shift away from a volatile oil-centric economy. This policy has the potential to reduce the impact of any future international financial crises, and is also creating significant investment and financing opportunities. We've designed this year's conference so that financial decision-makers from the Kingdom, the GCC, and the international finance sector can exchange ideas and information about how best to leverage the Kingdom's policy innovations," said Richard Banks, Regional Director, Euromoney Conferences.
Economic Diversification Guided by 'Long-Term Strategy 2025'
Financial leaders from The World Bank, Al Rajhi Capital , HSBC, Jadwa Investment, BNP Paribas, Gulf International Bank, Saudi Investment Bank, NCB and Investor for Securities will discuss the impact of these policies at the Euromoney Saudi Arabia Conference taking place on 6 May.
Speaking on the success of economic diversification, the Kingdoms' non-oil exports reached a record SAR 206 billion in 2013, a rise of 9.2 percent from 2012, according to a recent report from Al Rajhi Capital . In 2014's balanced budget of SAR 855 billion, a record high in budgeted government expenditure driving the economy, which is predicted to reach 4.0 percent real GDP growth in 2014.
Construction, retail, transport, manufacturing, and communications are all posting strong growth this year, according to Jadwa Investment.
Spending in 2014 is focused on three key areas: education (SAR 210 billion), healthcare (SAR 108 billion) and infrastructure (SAR 66.6 billion). This spending will support educational institutions and students studying abroad; medical and recreational facilities; and transportation, ports and airports, and industrial projects.
Further fuelling economic diversification are the Kingdom's four Economic Cities being developed by the Saudi Arabia General Investment Authority. By 2020, these are slated to generate USD 150 billion in GDP and create 1.3 million jobs.
For international financial organisations, this concerted effort to enhance diversification is opening new opportunity for partnership and even potentially inward investment. The 9th Euromoney Saudi Arabia Conference is set to provide an ideal opportunity to examine these new opportunities.
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