Analysis: The transformative journey of Saudi Arabia's exports

31 January 2024 5 min. read

Saudi Arabia’s Vision 2030 is a wide-ranging government program that aims to diversify the economy of the Kingdom, transform and future-proof the business environment, and lift the welfare of citizens. Having hit the halfway mark of Vision 2030, new economic analysis sheds light on the impact of the transformative trajectory on the Kingdom’s exports.

Saudi Arabia's Vision 2030 represents a fundamental shift from traditional reliance on oil to building a more sustainable economic landscape. The analysis from GGC Consulting, which stretches a period of seven years, shows a significant 78% increase in non-oil exports, amounting to 137 billion Saudi Riyals.

This growth corresponds with a 12% rise in the real gross domestic product (GDP) and an impressive 744% surge in the current account. According to the researchers, the developments demonstrate the dynamic interaction between economic growth, and that of exports and the current account.

Current Account with Real GDP and Oil prices


Exports – whether oil-related or non-oil – stand as a fundamental economic indicator, playing a pivotal role in assessing a country’s economic strength and viability. The impact of net exports extends across various economic dimensions, influencing the dynamics of the labor force, inflation rates, and economic growth.

In Saudi Arabia, the rise in non-oil exports demonstrates the success to date of the path towards economic diversification. This diversification can be seen in various sectors, including in the petrochemical, plastic, basic metals, and electrical machinery industries.

Empirical analysis of the economic indicators
Using a so-called ‘Vector Error Correction Model’, one of the models applied by GGC Consulting, the researchers explored the short- and long-run relationship between non-oil exports and the current account, considering the influence of oil exports and real gross domestic product in Saudi Arabia from Q1 2016 to Q2 2023.

Among the notable findings are:

  • A 1% increase in non-oil exports leads to a 5% increase in the current account in the short term.
  • A 1% increase in oil exports results in a 3.5% decrease in the current account in the short term, but results in an increase in the current account by 2% in the long term. The short term results are attributed to the direct positive impact of oil exports on national income and consumption expenditure.
  • In the long term, a 1% rise in real GDP has a negative effect on the current account by 6%. This is also due to the accompanying increase in income, raising the proportion of consumption expenditure.

An ‘Impulse Response’ analysis reflects the impact of a one standard deviation shock to the same indigenous variable or on another variable. This test uncovers the reactions of each variable to innovations originating from other variables, which plays a crucial role in the forecasting process.

Analysis: The transformative journey of Saudi Arabia's exports

GGC Consulting’s researchers conducted this analysis across four factors – real GDP, non-oil exports, oil exports, and the current account – highlighting the impact and interconnectedness of these factors in response to a shock (in this case: innovation).

The authors also conducted a ‘Granger Causality Ward’ test, which examines whether one time series can predict another in both the short-and -long-term. The analysis indicates that the short-term economic growth in Saudi Arabia will Granger cause non-oil exports at 10% significance level, contributing to both short and long-term improvements in the current account.

At the same time, sustained growth in oil exports aligns with efforts to strengthen non-oil exports, showcasing the Kingdom’s dedication to achieving Vision 2030 by aiming for non-oil exports to constitute 50% of the non-oil gross domestic product.

The transformative journey of Saudi Arabia's exports - Chart 3.psd

Recommendations for sustainable growth

Based on their analysis, GGC Consulting’s authors puts forward a number of strategic export-focused recommendations to further promote economic development and ensure the lasting success of Vision 2030:

Economic diversification focus
Emphasize the promotion of economic diversification and strategic investments in key sectors, with a particular emphasis on the development of the agricultural and industrial segments to harness growth benefits and generate employment opportunities.

Stimulating investment and supporting export sectors
Prioritize the incentivization of investments and the fortification of market dynamics through judicious monetary policies, directing foreign exchange policies to augment competitiveness.

Infrastructure development for enhanced competitiveness:
Prioritize the enhancement of electricity infrastructure to mitigate costs and elevate productivity, thereby reinforcing competitiveness in non-oil exports.