From futuristic NEOM to tech and tourism, Saudi Arabia's priorities are shifting

When Saudi Arabia archetypal announced plans to reinvent its oil-based economy, immense infrastructure projects similar the futuristic portion NEOM and astute metropolis The Line were championed arsenic cardinal to the transformation.

Almost a decennary connected from the motorboat of its "Vision 2030" translation strategy, however, and Riyadh's priorities person shifted with the times.

Now, exertion and artificial quality are cardinal priorities for the kingdom.

"We're reprioritizing a small spot towards sectors that request it the most, and contiguous it's technology, artificial intelligence," Faisal Alibrahim, Saudi's system minister, told CNBC Wednesday.

"We privation to determination into an economical operation that is productivity-led and astatine the bosom of productivity is technology, innovation and generative AI," helium told CNBC's Dan Murphy connected the sidelines of the Future Investment Initiative (FII) successful Riyadh.

Riyadh's Vision 2030 strategy to diversify its system distant from oil has seen it invest heavy successful tourism, taste and sports events, exertion and infrastructure.

"Our superior nonsubjective is non-oil maturation and non-oil maturation has been steadily increasing, this is our main operator of economical growth," Alibrahim said, noting that non-oil activities present correspond 56% of full existent GDP successful Saudi Arabia.

"All of our translation efforts are to execute non-oil maturation truthful we tin diversify our system from having to trust connected a azygous commodity terms and however large the authorities fund is, but besides to trust connected backstage assemblage dynamism and to beryllium acceptable for the future."

Alibrahim said sectors similar tourism had been performing acold amended than expected, with targets acceptable for 2030 achieved years successful advance, prompting the kingdom to up its people to 150 cardinal visitors by the extremity of the decade, helium said.

A cardinal pillar of the Vision 2030 programme is the instauration of NEOM, an municipality improvement task with a futuristic, car-free and zero-carbon metropolis called The Line astatine its center.

It's estimated that the full NEOM task volition outgo $1.5 trillion, with The Line seen costing astir $500 billion, but Saudi Arabia has looked to chopped costs successful caller years as its fund shortage has grown amid little lipid prices.

Alibrahim said "agility" and the quality to displacement priorities and amend plans had go cardinal parts of Vision 2030, noting that "the infinitesimal these plans aren't solving for your optimal outcomes is the infinitesimal you request to re-plan and adjust."

This displacement successful priorities has seen the technology, innovation and artificial quality sectors go much important areas of focus.

Alibrahim told CNBC that Saudi was present seen arsenic a onshore of accidental for investors, arsenic good arsenic investment.

"People present stopped coming to Saudi to instrumentality money, they're coming present to marque money," helium said.

"Saudi stopped being lone a root of superior to [being] besides a superior of existent economical opportunities," helium added. "We're conscionable unlocking the potential."

In September, the Saudi concern ministry estimated in a pre-budget statement that the fund shortage for 2026 volition beryllium 3.3% of GDP and that it was comfy with that level.

"The authorities volition proceed to follow expansionary spending policies that are contrary to the economical cycle, and [which are] directed towards nationalist priorities with societal and economical impact, and successful a mode that contributes to achieving the goals of the Saudi's Vision 2030, and diversifying the economical base," the ministry said successful a statement.

It besides forecast that the system would grow 4.4% successful 2025, which it said was supported by the maturation of non-oil activities, and by 4.6% successful 2026. On Wednesday, Alibrahim upgraded the 2025 forecast, stating that the kingdom's 2025 existent GDP maturation volition beryllium 5.1%.

Saudi Arabia's Finance Minister Mohammed Aljadaan has played down concerns implicit Saudi Arabia's increasing indebtedness heap (albeit a comparatively debased 1 of 32% of GDP) and deficit.

"The ratio of public debt to GDP is still at relatively low levels compared to many other economies, and that it is within safe limits compared to the size of the economy, and is supported by financial reserves," the curate said.