Five Leading Sectors in Saudi Arabia with Growth Opportunities
Construction, IT, Tourism, Mining and Logistics are the top sectors in Saudi Arabia with promising market expansion and growth avenues for international companies. Find out more below.
In the first quarter of 2024, Saudi Arabia topped the G20 in GDP growth, with the non-oil sector, especially activities related to wholesale and retail trade, restaurants, and hotels, contributing significantly.
At the same time, the country climbed to 16th place in the World Competitiveness Index, ranking first in employment and labor force long-term growth, social cohesion, and the percentage of the population with internet access.
All these achievements highlight the Kingdom’s success in diversifying its economy, a continuing trend that has opened many lucrative opportunities that companies can leverage in key sectors of the economy such as mining, IT, construction, logistics, and tourism.
Key Highlights
- Since 2021, the mining sector has seen a 138% increase in exploitation licenses.
- ICT spending in the Kingdom is projected to reach $37.5 billion.
- Saudi hospitality revenues are forecast to grow by 7.5% from 2023 to 2028.
- Public spending on the cloud in the Kingdom is expected to reach $2.4 billion in 2024 and $4.7 billion in 2027.
The Construction Sector is Poised for Sustained Growth
The boom in Saudi Arabia’s construction sector is largely driven by the rapidly expanding tourism sector, ambitious Giga projects, and substantial investments in strengthening infrastructure as demand for residential and commercial properties increases.
The most prominent of the giga projects are Diriyah Gate, Amaala, the Red Sea, Qiddyah and ROSHN, and NEOM, all of which are attracting both domestic and international investments and fueling most of the construction surge.
In addition to these mega-projects, the Kingdom has heavily targeted efficiency in its infrastructure projects in recent years, which has been crucial in sustaining the sector's growth. Efforts include streamlining processes, adopting advanced technologies, and implementing stringent project management practices to ensure the timely and cost-effective completion of projects.
The combination of these efforts positions the Saudi market to be the largest worldwide by 2028, with an output value worth $181.5 billion, providing companies with compelling growth opportunities and resounding success.
The fast-changing dynamics in the construction scene have attracted global attention, particularly from international players who seek to gain a first-mover advantage by entering the Kingdom.
The country's preparations to host Expo 2030 and the 2034 FIFA World Cup are giving rise to new opportunities that attract an influx of international companies aiming to seize the ensuing growth prospects.
As part of the AstroLabs’ expansion network, global companies like Grankraft and ADB SAFEGATE, contribute to the development of the construction sector in Saudi Arabia, each leveraging its own set of expertise.
The IT Sector Supports the Kingdom's Roadmap for Global Leadership
Saudi Arabia's IT sector is rapidly emerging as the Kingdom's frontier of growth, supporting its rise as a leading hub for tech advancements on the global map. According to reports from a research firm, ICT spending in the Kingdom is projected to reach $37.5 billion, making it the fastest-growing IT market in the MENA region.
The launch of the Digital Transformation Index 2024 further highlights the Kingdom's commitment to advancing its e-government capabilities and improving digital services.
These efforts allow Saudi Arabia to stand out as a leader in today’s digital revolution, offering numerous opportunities for technology companies to invest and expand. At the heart of this monumental changes are tech companies like Bespin Global MEA, an e& enterprise company that works to accelerate the Kingdom's transition towards a cloud-native nation.
The company looks to seize a large market opportunity rooted in the fact that public spending on the cloud in the Kingdom is expected to reach the $2.4 billion mark in 2024 and $4.7 billion in 2027.
Across the tech sector, AI is driving economic growth, with international companies such as Artefact choosing the Kingdom as an expansion destination. With a focus on supporting the Kingdom's digitization efforts, the company has been closely working with governmental entities and participating in mega projects across diverse industries to assist with their AI initiatives. Both companies have expanded their operations to the Kingdom with the help of our on-ground team.
The Tourism Sector Leads the Kingdom’s Drive Toward a Diverse Economy
Tourism is yet another major driver of economic growth for Saudi Arabia, underpinned by giga projects, the rapid expansion of the sports and entertainment sectors in line with Vision 2030, as well as government initiatives.
For instance, the recently announced launch of the Saudi Summer Program 2024 offers diverse activities and events to attract tourists and spotlight the Kingdom's rich cultural heritage and historical sites.
This is among a series of initiatives that seek to increase the tourism industry’s growth trajectory, as the country looks to raise tourism revenue to $85 billion this year, up from $66 billion in 2023.
Projects like Qiddiya, an entertainment-led giga project located near Riyadh, lead the growth of tourism by fueling the expansion of the broader entertainment sector, projected to rise to $1.17 billion by 2030, growing 47.65% from a mere $23.77 million in 2020.
This anticipated growth is giving a jolt to the hospitality sector. As per estimates, revenues in the sector are expected to grow by 7.5% from 2023 to 2028, as tourist inflows are bound to increase, reaching 150 million by 2030. This projected growth is primarily owed to government-led initiatives aiming to expand the entertainment and leisure (E&L) sectors.
Much of the growth is coming from the giga projects, which command 73% of the country’s hotel pipeline.
To learn more about the tourism sector in Saudi Arabia – AstroLabs’ comprehensive guidebook provides insights into the tourism landscape in Saudi Arabia.
The Logistics Sector is at the Core of the Kingdom's Economic Advantage
The logistics industry remains at the heart of Vision 2030’s objectives to enhance the Kingdom’s connectivity to global markets, attract direct foreign investments (FDIs), and eventually contribute to its ongoing diversification efforts.
Since its launch in 2019, the National Industrial Development and Logistics Program (NIDLP) has integrated key economic sectors such as energy, mining, industry, and logistics by allocating over $100 billion in investments in an effort to strengthen the country's infrastructure and supply chain capabilities.
Since Saudi Arabia’s territory connects Asia, Africa, and Europe, the country is in a privileged position to become the center of a global logistics network. Therefore, Saudi Arabia’s developments include the establishment of 59 logistics zones, with 21 already operational, facilitating cargo traffic and supporting local supply chains through public-private partnerships.
Moreover, the Global Supply Chain Resilience Initiative (GSCRI), launched by Crown Prince Mohammed bin Salman, is set to attract $10 billion in investments, further boosting the logistics sector by integrating local SMEs with large strategic industries.
International logistics companies are drawn to the Kingdom to expand the scope of their operations and strengthen their stature within the global industry, notably Unipart. The UK-based company is increasingly aiming to scale its operations in the Kingdom amid sustained improvement and modernization of supply chain practices and policies.
The Mining Sector is Key to Attracting Foreign Investment
Since 2021, the mining sector has seen a 138% increase in exploitation licenses, driven by regulatory reforms and initiatives like the Accelerated Exploration Program.
The initiative aims to boost mineral production and investment in the sector, and the Kingdom is now inviting global firms to participate, providing international companies with the opportunity to leverage Saudi Arabia’s mineral resources while creating many job opportunities for the local workforce.
In the fifth and latest round of exploration licensing, the country approved six mining companies to explore various sites across Saudi Arabia; the development closely followed the Kingdom’s recent memorandum of understanding (MOU) with a Brazilian mining company tasked with developing iron ore briquettes in Saudi Arabia.
With more and more companies motivated by the opportunities present in Saudi Arabia’s mining sector, the country is capable of retaining its leading position in the region and globally.
Multinational businesses considering expanding to Saudi Arabia face a ripe market supported by strategic reforms and substantial investments stemming from Saudi Arabia's potential to become a global economic powerhouse and a leading center for private sector investments, poised to reach 65% by 2030 and the second fastest-growing economy five years earlier.
