Digital render of NEOM\u2019s The Line project in Saudi Arabia<\/p>\n
The Line, NEOM<\/p>\n<\/div>\n<\/div>\n<\/div>\n
When Saudi Arabia first announced plans to reinvent its oil-based economy, huge infrastructure projects like the futuristic region NEOM and smart city The Line were championed as central to the transformation.<\/p>\n
Almost a decade on from the launch of its \u201cVision 2030\u201d transformation strategy, however, and Riyadh\u2019s priorities have shifted with the times.<\/p>\n
Now, technology and artificial intelligence are key priorities for the kingdom.<\/p>\n
\u201cWe\u2019re reprioritizing a little bit towards sectors that need it the most, and today it\u2019s technology, artificial intelligence,\u201d Faisal Alibrahim, Saudi\u2019s economy minister, told CNBC Wednesday.<\/p>\n
\u201cWe want to move into an economic structure that is productivity-led and at the heart of productivity is technology, innovation and generative AI,\u201d he told CNBC\u2019s Dan Murphy on the sidelines of the Future Investment Initiative (FII) in Riyadh.<\/p>\n<\/div>\n
Riyadh\u2019s Vision 2030 strategy to diversify its economy away from oil<\/a> has seen it inves<\/em>t heavily in tourism, cultural and sports events, technology and infrastructure.<\/p>\n \u201cOur primary objective is non-oil growth and non-oil growth has been steadily increasing, this is our main driver of economic growth,\u201d Alibrahim said, noting that non-oil activities now represent 56% of total real GDP in Saudi Arabia.<\/p>\n \u201cAll of our transformation efforts are to achieve non-oil growth so we can diversify our economy from having to rely on a single commodity price and how big the government budget is, but also to rely on private sector dynamism and to be ready for the future.\u201d<\/p>\n Alibrahim said sectors like tourism had been performing far better than expected, with targets set for 2030 achieved years in advance, prompting the kingdom to up its target to 150 million visitors by the end of the decade, he said.<\/p>\n<\/div>\n A key pillar of the Vision 2030 program is the creation of NEOM, an urban development project with a futuristic, car-free and zero-carbon city called The Line at its center.<\/p>\n It\u2019s estimated that the entire NEOM project will cost $1.5 trillion, with The Line seen costing around $500 billion, but Saudi Arabia has looked to cut costs in recent years as its budget deficit has grown<\/a> amid lower oil prices.<\/p>\n Alibrahim said \u201cagility\u201d and the ability to shift priorities and amend plans had become key parts of Vision 2030, noting that \u201cthe minute these plans aren\u2019t solving for your optimal outcomes is the minute you need to re-plan and adjust.\u201d<\/p>\n This shift in priorities has seen the technology, innovation and artificial intelligence sectors become more important areas of focus.<\/p>\n<\/div>\n Alibrahim told CNBC that Saudi was now seen as a land of opportunity for investors, as well as investment.<\/p>\n \u201cPeople here stopped coming to Saudi to take money, they\u2019re coming here to make money,\u201d he said.<\/p>\n \u201cSaudi stopped being only a source of capital to [being] also a capital of real economic opportunities,\u201d he added. \u201cWe\u2019re just unlocking the potential.\u201d<\/p>\n<\/div>\n Construction for The Line project in Saudi Arabia\u2019s NEOM, October 2024<\/p>\n Giles Pendleton, The Line at NEOM<\/p>\n<\/div>\n<\/div>\n<\/div>\n In September, the Saudi finance ministry estimated in a pre-budget statement<\/a> that the budget deficit for 2026 will be 3.3% of GDP and that it was comfortable with that level.<\/p>\n \u201cThe government will continue to adopt expansionary spending policies that are contrary to the economic cycle, and [which are] directed towards national priorities with social and economic impact, and in a way that contributes to achieving the goals of the Saudi\u2019s Vision 2030, and diversifying the economic base,\u201d the ministry said in a statement.<\/p>\n It also forecast that the economy would expand 4.4% in 2025, which it said was supported by the growth of non-oil activities,\u00a0and by 4.6% in 2026. On Wednesday, Alibrahim upgraded the 2025 forecast, stating that the kingdom\u2019s 2025 real GDP growth will be 5.1%.<\/p>\n Saudi Arabia\u2019s Finance Minister Mohammed Aljadaan has played down concerns over Saudi Arabia\u2019s growing debt pile (albeit a relatively low one of 32% of GDP<\/a>) and deficit.<\/p>\n \u201cThe\u00a0ratio\u00a0of\u00a0public\u00a0debt\u00a0to\u00a0GDP\u00a0is\u00a0still\u00a0at\u00a0relatively\u00a0low\u00a0levels\u00a0compared\u00a0to\u00a0many\u00a0other\u00a0economies,\u00a0and\u00a0that\u00a0it\u00a0is\u00a0within\u00a0safe\u00a0limits\u00a0compared\u00a0to\u00a0the\u00a0size\u00a0of\u00a0the\u00a0economy,\u00a0and\u00a0is\u00a0supported\u00a0by\u00a0financial\u00a0reserves,\u201d the minister said.<\/p>\n![\"'We](\"https:\/\/image.cnbcfm.com\/api\/v1\/image\/108217024-17615453201761545317-42287817403-1080pnbcnews.jpg?v=1761545319&w=750&h=422&vtcrop=y\")
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People come here \u2018to make money\u2019<\/h2>\n