The Challenge of “Normalizing” the Saudi Economy

This is a publication of selected presentations submitted to Al Rahmaniah Annual Forum in fields of sociology, economics, and international affairs and have pertinent relevance to issues of interest to the Kingdom of Saudi Arabia. This Forum is annually organized by Abdulrahman Al-Sudairy Cultural Centre in Al Ghat province and is attended by more than forty scholars, researchers, and intellectuals from Saudi Arabia, the Arab world, the United States of America and Europe; the forum is sponsored by Abdulrahman Al Sudairy Foundation.

Introduction 

Like many countries before it, Saudi Arabia now faces the twin challenge of having to stabilize its internal and external balances in the face of a large macro shock, and to reform its economic structure in order to fire up new sources of growth to replace a weakening but still overly dominant oil sector. The publication in 2016 of its Vision 2030 has injected a dose of optimism and unleashed a new dynamic of change in a society known in the past for its conservatism and slow decision-making. Yet, the Vision also obfuscates three central issues, which are at the heart of the country's specifically, and which will make the challenges ahead particularity trying: the very large size of  the required macro-economic adjustment, which threatens both the financial and social stability of the kingdom; the extraordinary dependence of its economy on migrant labor, which both reduces the tax base, and makes the challenge of creating jobs for young Saudis more difficult; and deeper down, its unusual political economy, which creates difficulties in balancing the interests of businesses and workers while preserving its current governance system.