{"id":105683,"date":"2026-02-09T00:00:00","date_gmt":"2026-02-09T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2026\/02\/09\/saudi-shifts-from-scale-to-quality-as-diversification-enters-new-phase-pwc\/"},"modified":"2026-02-09T00:00:00","modified_gmt":"2026-02-09T00:00:00","slug":"saudi-shifts-from-scale-to-quality-as-diversification-enters-new-phase-pwc","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2026\/02\/09\/saudi-shifts-from-scale-to-quality-as-diversification-enters-new-phase-pwc\/","title":{"rendered":"Saudi shifts from scale to quality as diversification enters new phase -PwC"},"content":{"rendered":"

<\/strong>Saudi Arabia i<\/strong>s <\/strong>turning a new economic leaf, moving away from spending big to <\/strong>spending smart<\/strong>, prioritizing \u201cquality,\u201d according to PwC Middle East\u2019s Saudi Economy Watch<\/a>. Even though the non-oil sector currently makes up 56% of our SAR 4.7 tn economy, PwC warns that the \u201clinkage\u201d to oil remains uncomfortably tight. To break this oil cycle, the government is now pivoting toward an \u201cexport-oriented\u201d strategy to build economic resilience.<\/p>\n

\n

Now for the hard part<\/p>\n

The \u201ceasy\u201d phase of diversification \u2014 driven by gigaprojects construction, domestic <\/strong>consumption, and massive public-sector capital injection \u2014 is reaching its limit<\/strong> as fiscal conditions tighten. With softer oil prices reducing projected 2025 revenues by over 13%, the government is getting more selective.<\/p>\n

We\u2019re moving from a \u201cbuild it and they will come\u201d model to a \u201cproduce it and sell it to the<\/strong> world\u201d framework. <\/strong>For the private sector, this is a nudge to move up the value chain. While construction and retail provided quick Ws, they didn\u2019t build the \u201ctransferable capabilities\u201d needed to survive a down-cycle. The victors of the next decade will be firms that integrate into global supply chains \u2014 moving from basic assembly to engineering, R&D, and specialized services.<\/p>\n

\n

The cost of the oil link<\/p>\n

The data point that matters:<\/strong> PwC estimates the elasticity of Saudi non-oil GDP to oil prices at 0.05, meaning a sustained 10% drop in oil prices over three years would shave roughly SAR 430 bn off cumulative non-oil GDP compared with baseline growth projections.<\/p>\n

At the sector level, some are safer from oil than others<\/strong>.\u201cTechnology and tourism are probably the least elastic sectors and have already implemented many projects, so they are not seeking new finance,\u201d MENA economist Hamzeh Al Gaaod tells EnterpriseAM. \u201cNewer projects are more likely to face reduced market liquidity due to their funding sources' ties to oil markets,\u201d he added.<\/p>\n

\n

Looking ahead<\/p>\n

The payoff: <\/strong>PwC's growth model suggests that shifting to this productivity-led model could boost non-oil GDP by an estimated 5.5% and total factor productivity by 10% by 2035.<\/p>\n

The pivot needs a workforce to match: <\/strong>The Kingdom\u2019s next phase will depend on a labor market equipped with professionals skilled in digital and AI technologies, the report said, amid rising demand for engineers and tech specialists in growing sectors such as manufacturing, energy, and automation. Logistics and metals extraction are among the sectors where the Kingdom holds a competitive advantage, making them prime targets for localizing expertise, Al Gaaod explained.<\/p>\n

(** Tap or click the headline above to read this story with all of the links<\/strong> to our background and outside sources.)<\/p>\n","protected":false},"excerpt":{"rendered":"

A 10% change in oil prices translates into a 0.5% change in non-oil GDP, according to PwC<\/p>\n","protected":false},"author":1,"featured_media":105684,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2571],"tags":[2867,27,10,1365,786],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-105683","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-diversification","tag-economy","tag-enterpriseam-ksa","tag-non-oil-economy","tag-pwc","wpautop","entry"],"acf":{"mongo_id":"137f3ccd-e818-4712-aada-611646f3ebdc","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2025\/3\/46.jpg","photo_position":"above","homepage_title":"","full_issue_title":"The Kingdom pivots to quality growth as diversification enters new phase -PwC","related_issue":[105676],"teaser":"A 10% change in oil prices translates into a 0.5% change in non-oil GDP, according to PwC"},"yoast_head":"\nSaudi shifts from scale to quality as diversification enters new phase -PwC - 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