Tourism to Boost Region's Economies; Saudi Consumer Spending to Rise 4.5%

Riyadh The Mastercard Economics Institute has released its annual report Economic Outlook 2025. This report looks at important trends that will shape the economy in 2025. The report says that the world has handled many challenges well in the last few years.

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The report predicts that 2025 will see changes in government spending policies and a move towards steady economic growth and controlled inflation rates.

In Saudi Arabia, the report predicts the country's economy will grow by 3.7% in 2025. This is higher than the world’s average growth of 3.2%. Consumer spending in the Kingdom is expected to go up by 4.5%, while prices will increase by 2%.

This economic growth is being driven by non-oil businesses and industries. Saudi Arabia is focusing on diversifying its economy as part of its Vision 2030 plan. The government has strong financial support to invest in new projects, such as roads, buildings, and other infrastructure. Lower borrowing costs will also encourage local businesses to invest and create more jobs. The growing population of Saudi Arabia will also support this increase in spending and activity.

Tourism is expected to stay strong in the future. The Gulf countries are putting a lot of effort into becoming the top destinations for travel. Many projects in tourism are attracting visitors. Also, the strong value of the dollar in the region has led to more people traveling abroad.

Khatija Haque, the Chief Economist for Mastercard in the region, said that Saudi Arabia's economic reforms and non-oil growth will help the country stay ahead of many other economies. She added that Saudi Arabia is taking steps to build a stable and strong economy by focusing on diversification and reforms.

The report also talks about changing travel habits. A new trend is called “travel twins.” This means travelers are exploring less crowded destinations with similar attractions at lower costs. For instance, Saudi visitors are exploring places like Lombok in Southeast Asia as alternatives to more popular destinations like Bali.

Another key trend is spending money on experiences instead of material things. This trend is growing in Saudi Arabia. People are spending more on events, vacations, and activities that create special memories. In February 2024, spending on such experiences grew by 451% compared to February 2019. This shows Saudi Arabia’s focus on hosting big events and building leisure spaces for its residents and visitors.

The report also focuses on migration and its role in economic growth. Many people are moving to Saudi Arabia, which has added talent to the local workforce. Between 2019 and 2023, migration contributed 4.4% to Saudi Arabia's population growth. These migrants also send money back to their families in their home countries. According to the World Bank, remittances grew from $128 billion in 2000 to $857 billion in 2023. This growth is expected to keep increasing by 3% through 2025.

Digital money transfer services are making it easier and cheaper for these financial payments to happen. This has made remittances faster, safer, and more efficient.

Another important trend is the rise of women joining the workforce. Women are now entering the workforce in larger numbers in Saudi Arabia. Data shows that women’s participation grew from 18% in 2017 to 34.5% in 2023. This is because of reforms in social policies and Vision 2030 plans. Many new job opportunities in healthcare and education have created chances for women. Remote work has also made it easier for women to work while taking care of their families.

The report also mentions that global inflation is getting better. Prices for many goods and services are expected to fall as the costs of goods like electronics and household items decrease. Wage growth is also slowing down, which will reduce inflation in areas like services. The report predicts that global inflation will drop to 3.2%.

This shows that economies worldwide are recovering from inflation challenges. It also suggests that Saudi Arabia's efforts to focus on reforms, investments, and its Vision 2030 goals will lead to strong and steady growth.

In conclusion, the Economic Outlook 2025 report shows that Saudi Arabia will continue to grow faster than the global economy. This will be due to reforms, economic diversification, strong investment in non-oil sectors, and the growth of tourism and consumer spending. These steps will also help the country prepare for future challenges and opportunities.