RIYADH: Investments in Saudi Arabia’s tourism and entertainment sectors will continue to accelerate in 2024 as the Kingdom steadily diversifies its economy, according to an expert.
In a recent commentary, Samy Chaar, chief economist at Swiss banking group Lombard Odier, said shifting away from hydrocarbon production would be essential to Saudi Arabia’s and the Middle East region’s future economic prospects.
“Diversification away from hydrocarbon production will be key to the region’s economic prospects, where ‘National Visions’ will act as catalysts for coordinated investments into non-oil and gas sectors,” said Chaar.
He added: “In Saudi Arabia, investments in tourism and entertainment sectors will continue to accelerate in 2024. Public sector investments in the UAE will continue to jump as the country leads the region in solar energy investment.”
The Kingdom considers developing the tourism and entertainment sectors a crucial goal in its Vision 2030 journey, as the region is slowly reducing its dependency on oil.
Saudi Arabia’s National Tourism Strategy aims to attract over 150 million visitors by 2030 and increase the tourism sector’s contribution to the country’s gross domestic product to more than 10 percent.
Chaar underscored that the inflation rate in the Middle East is expected to dip in 2024 following the recent rapid interest rate hiking cycles.
He further noted that the region’s monetary authorities might intervene in the money market to cap intermittent liquidity squeezes.
When discussing the area’s overall monetary growth, Chaar said that the Middle East is poised for a modest economic rebound in 2024.
“A gradual reversal of oil output cuts for some Gulf Cooperation Council economies, together with eventual rate cuts, is likely to propel growth in the region by just under 3 percent in 2024, shrugging off the slowing global economy,” said Chaar.
He added: “Amid elevated geopolitical risks, but with slowing global demand growth and ample supply, we expect Brent crude to trade in a USD 80-90 per barrel range this year with risks to the downside in coming months, then toward the middle of the range from mid-year.”
Earlier in February, in its latest economic outlook report, the International Monetary Fund echoed similar views and projected a 2.8 percent economic growth in the Middle East region in 2024.
The IMF also warned that the economic development in the region will be impacted further if the tension in Gaza escalates.