Saudi Arabia’s ambitions to pivot from an oil-driven economy towards one anchored in services, investment and global connectivity were given fresh scrutiny this week with the release of the International Monetary Fund’s 2025 Article IV Consultation Report on Saudi Arabia. The assessment highlights an economy making strides in diversification, but also makes clear that the durability of the Kingdom’s transformation will depend heavily on its ability to capture — and sustain — global tourism demand.
Key take-aways
The report covers KSA’s entire economy, underlining the importance of tourism as a key driver. The main takeaways are as follows:
- Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels.
- Despite heightened uncertainty and declining commodity prices, the outlook remains strong with risks to the downside. External and fiscal buffers remain ample, even as current account and fiscal deficits persist over the medium term.
- Given the current heightened global uncertainty, pursuing a countercyclical fiscal stance is crucial. Addressing strong credit is important to mitigate risks to systemic financial stability. At the same time, structural reforms are essential to sustain non-oil growth and drive economic diversification, irrespective of oil price developments.
Tourism as the new growth engine
The IMF report shows non-oil GDP growing by 4.5% in 2024, led by retail, hospitality, and construction — sectors most closely tied to visitor flows. For decades, Saudi Arabia’s global reputation rested almost exclusively on oil exports and religious pilgrimage. Now, airport terminals, giga-projects, luxury resorts and cultural festivals are emerging as the hallmarks of a new era.
Mega-events as catalysts
At the heart of this drive are the mega-events that Riyadh has aggressively pursued. Saudi Arabia is set to host the 2027 Asian Cup, the 2029 Asian Winter Games, Expo 2030 and, most ambitiously, the FIFA World Cup in 2034. Preparations for football’s showcase alone involve more than $26 billion of investment, including stadiums, metro extensions, new airport terminals and hotel capacity upgrades.
Short-term economic boosts are likely: private estimates put the potential GDP gain from the World Cup at between $9 billion and $14 billion. Yet the IMF stresses that the success of such events “will depend on legacy planning to ensure that infrastructure remains useful and demand is sustained once the events conclude.” Past hosts such as Brazil and South Africa provide cautionary tales where post-event tourism expectations failed to materialise.
Saudi policymakers insist their approach is different. Investments are structured to support public-private partnerships and longer-term use. The intention is to embed these assets into the broader fabric of Vision 2030.
Rebounding tourism receipts
Tourism receipts underline the scale of opportunity. After the pandemic years, the sector rebounded sharply, with net travel revenues climbing to over $13 billion in 2023. Inbound visitors surpassed 27 million, supported by streamlined e-visa schemes and plans for a new GCC-wide “Schengen-style” visa.
Religious tourism remains the anchor, with millions attending Hajj and Umrah annually. Yet diversification is now visible across the map: Red Sea luxury resorts, cultural revival in Diriyah, adventure tourism in AlUla, and winter sports planned at Trojena in NEOM. The ambition is clear — to move Saudi Arabia beyond pilgrimage alone, towards a multi-faceted tourism economy.
An economy in transition
The IMF recognises Saudi Arabia’s progress in fiscal management, despite volatile oil markets. The Kingdom has maintained growth in non-oil sectors and continues to channel public investment into its Vision 2030 agenda. The Fund notes, however, that long-term sustainability depends increasingly on private sector leadership — with tourism at the forefront.
Employment is a critical element. Expanding tourism creates demand across skill levels. Success will require training programmes to prepare Saudis for roles in hospitality and travel services, alongside efforts to boost female participation, which has already doubled in just four years.
Kristalina Georgieva, IMF Managing Director, praised these achievements during a visit to Riyadh: “I congratulated the authorities on Saudi Arabia’s strong economic performance and impressive progress in implementing their Vision 2030 reform agenda, notably the doubling of the share of women in the labour force in just four years. Maintaining the reform momentum to further diversify the economy will be pivotal for longer-term prosperity.”
IMF deepens its regional presence
Saudi Arabia’s rising importance on the global economic stage was underscored last year when the IMF opened its first ever regional office in the Middle East and North Africa — in Riyadh. Announced in 2022 and inaugurated in April 2024, the office signals what Georgieva described as “taking our cooperation to a new level.”
The new office, led by veteran IMF economist Abdoul Aziz Wane, is tasked with enhancing capacity development, strengthening regional surveillance, and deepening policy dialogue with the Gulf Cooperation Council and wider MENAP region. Its activities already include high-level conferences in Riyadh and AlUla, technical workshops on direct investment and virtual assets, and training for regional financial regulators.
As Wane explained at the launch, the office aims to be a hub for regional dialogue and expertise: “The Riyadh office is here to work with countries to build resilience, strengthen institutions and ensure that economic transformation, from diversification to digitalisation, delivers tangible results for their people.”
For Saudi Arabia, hosting the IMF’s first regional office in MENA not only reinforces its status as a pivotal player in the region, but also bolsters confidence in its economic transition.
Risks on the horizon
Despite the momentum, the IMF remains cautious. Its analysis of past mega-events highlights the danger of overspending and under-delivery. Geopolitical tensions in the Middle East could undermine travel flows, while oil price volatility continues to shadow fiscal stability. The credibility of Saudi Arabia’s tourism strategy will rest on effective management of these risks.
The global brand challenge
Perhaps the hardest task remains building a tourism brand that resonates globally. Beyond religious pilgrimage, Saudi Arabia wants to be seen as open, modern and culturally authentic. Delivering on that promise requires not just infrastructure but also service quality, consistent safety, and storytelling that appeals to international travellers.
The IMF’s Article IV Consultation offers cautious optimism. Non-oil growth is robust, hospitality is driving expansion, and reforms are yielding visible results. The opening of the IMF’s regional office in Riyadh further elevates Saudi Arabia’s role as a hub for global economic dialogue. But the stakes remain high. Tourism has been chosen as the spearhead of Saudi Arabia’s economic diversification — and how effectively it is harnessed will determine not just fiscal outcomes, but the way the Kingdom is perceived on the global stage.
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Photo – top of page: STA
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