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Saudi Arabia is utilizing surging oil revenues to accelerate the transformation of its economy through the Vision 2030 initiative. The plan to diversify Saudi industry and markets has been in place since 2016, but the kingdom’s particularly strong growth in 2022 is helping it pursue those ambitions more aggressively.

Saudi Arabia is currently lining up trillions of dollars of investment in real estate and infrastructure, as well as airlines and supply chains that will facilitate greater movement of labor and capital throughout the country.

Related ETF: iShares MSCI Saudi Arabia ETF (KSA)

Saudi Arabia, continually reaping the benefits of persistently high energy prices throughout 2022, is utilizing revenues from the oil trade to expand other sectors of their economy as part of the Vision 2030 project – a major investment initiative meant to attract new business to the country, diversify away from oil, ease social restrictions, and establish a legacy for the Crown Prince and Prime Minister of Saudi Arabia, Mohammed bin Salman (MBS). MRP has been following the implementation of Vision 2030 since 2018, which was temporarily hamstrung by COVID-19 and low energy prices that were nowhere near what the country needed to address its budget.

However, over the last couple of years, the breakeven price for the Kingdom to balance their budget has fallen significantly, declining from $106.30 to $79.18 between 2014-2022, and now even further to just $69.02 for 2023. International benchmark Brent crude is currently trading north of $92.00 per barrel, about 33% greater than the minimum price level Saudi Arabia will need to address fiscal needs. Per Zawya, Saudi Arabia registered a budget surplus of nearly 78 billion riyals ($21 billion) in the second quarter of 2022, an almost 50% rise from a year earlier.

As MRP noted in August, International Monetary Fund (IMF) data projects Middle Eastern nations will land a $1.3 trillion windfall from extra oil revenues over the next four years. GCC nations – Saudi Arabia, UAE, Qatar, Bahrain, Kuwait, and Oman – will experience an especially significant gain from surging energy revenues in the near-term, collectively increasing economic growth by 6.4% this year, from 2.7% growth last year.

When these revenues eventually begin to recede, research shows Saudi Arabia’s economy will be much more durable and less vulnerable to the swings in commodity markets. Measured by total…

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