The Thriving Economy pillar is the gravitational centre of Vision 2030. Every reform, every infrastructure investment, every institutional reorganisation ultimately connects to a single existential imperative: weaning the Kingdom of Saudi Arabia from its dependence on hydrocarbon export revenues before the structural decline of global oil demand renders that dependence an economic death sentence. This is not hyperbole. Saudi Arabia’s leadership has stated explicitly that the Kingdom has approximately one generation to build a post-oil economic architecture — and the Thriving Economy pillar is the blueprint for that architecture.
As of early 2026, the performance of this pillar is the most consequential variable in determining whether Vision 2030 will be remembered as a transformational success or a well-intentioned aspiration that fell short of its targets.
Non-Oil GDP: The Central Metric
Non-oil GDP has emerged as the single most scrutinised economic metric in the Kingdom. At baseline, non-oil activities accounted for approximately 50 percent of GDP. Vision 2030 targets a non-oil share sufficient to sustain government expenditure and social services even in a prolonged low-oil-price environment.
The non-oil economy has grown at a compound annual rate of approximately 5.8 percent since 2016, driven by construction, real estate, entertainment, tourism, financial services, and manufacturing. By 2025, non-oil GDP reached an estimated $472 billion, representing meaningful progress toward diversification. However, this figure must be contextualised: oil revenues have also fluctuated significantly over the period, meaning that the non-oil share of GDP has been partially influenced by denominator effects (when oil revenues fall, non-oil share rises mechanically, and vice versa).
The structural test will come when oil prices enter a sustained trough. During the 2020 price collapse, Saudi Arabia’s fiscal deficit widened dramatically despite non-oil growth, demonstrating that the diversification achieved to date, while significant, is not yet sufficient to insulate the Kingdom from hydrocarbon price volatility. The fiscal breakeven oil price — the oil price required to balance the national budget — remains above $80 per barrel, down from approximately $100 at baseline but still reflecting substantial oil dependence.
Public Investment Fund: The Transformation Engine
The Public Investment Fund has evolved from a relatively passive holding company into the world’s most ambitious sovereign wealth fund, with assets under management approaching $940 billion. PIF’s role within the Thriving Economy pillar is multifaceted: it serves as the seed investor for new industries, the anchor tenant for giga-projects, the joint venture partner for foreign direct investment, and the market maker for the Tadawul exchange.
PIF’s domestic investment portfolio now spans NEOM, the Red Sea tourism project, Qiddiya entertainment city, ROSHN housing, Lucid Motors manufacturing, the Saudi Coffee Company, Savvy Gaming Group, and dozens of other ventures across virtually every sector of the economy. The fund’s 2021-2025 strategy committed to injecting SAR 150 billion annually into the domestic economy, creating approximately 1.8 million direct and indirect jobs over the period.
The scale of PIF’s domestic deployment raises legitimate questions about crowding-out effects. When the sovereign wealth fund is the dominant investor in tourism, entertainment, real estate, gaming, coffee, sports, and automotive manufacturing simultaneously, private sector participants may be deterred from competing in those spaces — paradoxically undermining the Vision 2030 goal of growing private sector contribution to 65 percent of GDP from approximately 40 percent at baseline.
PIF management has acknowledged this tension and has articulated a strategy of “catalytic investment” — entering new sectors to prove commercial viability before progressively divesting to private investors through IPOs and strategic sales. The Lucid Motors IPO, the planned listing of airport assets, and the partial privatisation of NEOM subsidiary companies are cited as evidence of this exit-to-private model. Whether the pace of divestiture will match the pace of new investment remains an open question.
Foreign Direct Investment: Progress Below Target
Vision 2030 set a target of increasing annual FDI inflows to approximately 5.7 percent of GDP, requiring flows of approximately $100 billion annually by 2030. Actual FDI performance, while improved from baseline, has fallen short of this aspirational target.
Annual FDI inflows reached an estimated $32.4 billion in 2025, a substantial increase from the $7.5 billion annual average in the years preceding Vision 2030 but still well below the 2030 target. The gap reflects several structural challenges: competition from the UAE (particularly Dubai and Abu Dhabi) for regional FDI; Saudi Arabia’s relatively nascent regulatory environment for foreign investment compared to established financial centres; the complexity of the business visa and company formation process despite reforms; and global FDI headwinds including pandemic recovery disruption and geopolitical risk repricing.
The Ministry of Investment (MISA) has implemented several reforms to improve the FDI environment, including the Regional Headquarters Programme (requiring multinational companies to establish Saudi headquarters to be eligible for government contracts), Special Economic Zones with preferential tax and regulatory treatment, and bilateral investment treaties. The Regional Headquarters Programme has been particularly effective, attracting commitments from over 500 international companies to establish Saudi operations by 2024, though the quality and scale of these operations varies significantly.
Saudisation and Labour Market Nationalisation
The Saudisation programme — known formally as Nitaqat and subsequently Nitaqat Mowazanah — represents one of the most complex elements of the Thriving Economy pillar. The programme mandates minimum quotas of Saudi national employees in private sector companies, with quotas varying by industry and company size. The stated objective is to reduce Saudi unemployment (particularly youth unemployment) while reducing dependence on expatriate labour.
Saudi unemployment has decreased from approximately 12.8 percent at baseline to 7.7 percent by late 2025, representing meaningful progress. However, the unemployment figure must be disaggregated. Youth unemployment (15-24 age cohort) remains above 20 percent. Female unemployment, while declining, remains higher than male unemployment. And crucially, a significant portion of Saudi employment growth has occurred in government and quasi-government entities (including PIF portfolio companies) rather than in genuinely private sector enterprises.
The tension between Saudisation mandates and economic competitiveness is real. Many private sector employers report that Saudisation quotas increase labour costs, reduce operational flexibility, and create compliance burdens that disincentivise business expansion. The government has attempted to mitigate these effects through wage subsidy programmes (Tamheer, Hafiz), training initiatives (Hadaf), and differentiated quota requirements by industry. But the fundamental tension between labour market nationalisation and private sector efficiency remains unresolved.
Tourism: The $150 Billion Aspiration
Tourism has been identified as a cornerstone of economic diversification, with Vision 2030 targeting 150 million annual visits (domestic and international combined) and tourism revenue contributing approximately 10 percent of GDP by 2030. The baseline in 2016 was approximately 40 million visits, heavily concentrated in Hajj and Umrah religious tourism.
Progress has been substantial. The introduction of the tourist e-visa in September 2019, the development of the Red Sea International destination, the opening of AlUla to tourism, the expansion of entertainment offerings, and the hosting of major international events have collectively grown the tourism sector. By 2025, total visits are estimated at approximately 100 million, with international leisure tourism growing rapidly from a near-zero base.
The tourism infrastructure pipeline is extraordinary in scale. The Red Sea Global project encompasses two luxury resort destinations across 50 islands along the Red Sea coast. NEOM includes the Trojena mountain resort and skiing destination. Diriyah Gate is being developed as a premium cultural and entertainment destination on Riyadh’s doorstep. And the expansion of Hajj and Umrah capacity — targeting 30 million Umrah pilgrims annually — continues through the ongoing expansion of the Grand Mosque and Madinah infrastructure.
The challenge for Saudi tourism is not supply-side infrastructure but demand-side positioning. The Kingdom must overcome decades of international perception as a closed, conservative society to establish itself as a leisure tourism destination capable of competing with the UAE, Egypt, Jordan, and Mediterranean destinations. The hosting of the 2034 World Cup will provide an unprecedented global marketing platform, but sustainable tourism growth requires consistent visitor experience quality, competitive pricing, and repeat visitation — metrics that take years to develop.
Industrial Strategy and Manufacturing
The National Industrial Development and Logistics Program (NIDLP) anchors the manufacturing dimension of economic diversification. The programme targets growth in military manufacturing (through the Saudi Arabian Military Industries Corporation, SAMI), renewable energy equipment manufacturing, petrochemical downstream processing, mining (particularly phosphates, bauxite, and gold through Ma’aden), and automotive manufacturing.
The Lucid Motors manufacturing plant in King Abdullah Economic City represents the highest-profile industrial attraction, producing electric vehicles for both the Saudi market and export. SAMI has established joint ventures with Lockheed Martin, Boeing, and BAE Systems for military equipment localisation. Ma’aden has grown into one of the world’s largest mining companies. And the renewable energy manufacturing programme aims to capture domestic value from the Kingdom’s massive solar and wind installation pipeline.
Fiscal Sustainability: The Unresolved Question
The ultimate test of the Thriving Economy pillar is fiscal sustainability — the ability to fund government expenditure, social services, and ongoing transformation investments without dependence on volatile hydrocarbon revenues. This requires not only non-oil GDP growth but non-oil government revenue growth: a shift from oil royalties to taxes, fees, and returns on sovereign wealth fund investments.
The introduction of Value Added Tax in 2018 (initially at 5 percent, raised to 15 percent in 2020) was a landmark fiscal reform. Combined with excise taxes, expatriate levies, and government service fees, non-oil government revenue has grown substantially. However, non-oil revenues still account for less than 35 percent of total government revenue, meaning the Kingdom remains structurally dependent on oil income to fund its operating budget and ambitious capital expenditure programme.
The fiscal breakeven oil price — the price of oil needed to balance the budget — has declined from approximately $100 per barrel to an estimated $80-85 per barrel by 2025. Reaching a breakeven price below $50 per barrel by 2030, which would provide meaningful insulation from oil price downturns, will require both continued non-oil revenue growth and expenditure discipline. The tension between fiscal consolidation and the massive capital spending required by giga-projects, military modernisation, and social sector investment makes this target exceptionally challenging.
Assessment
The Thriving Economy pillar is tracking at approximately 65 percent aggregate completion against its 2030 KPI portfolio. Non-oil GDP growth has been strong but remains insufficient to decouple fiscal sustainability from oil revenues. PIF has exceeded its deployment targets but faces questions about private sector crowding effects. FDI has improved but remains below aspirational targets. Saudisation has reduced headline unemployment but faces quality-of-employment challenges. Tourism infrastructure is world-class but demand-side development requires sustained effort.
The next four years will determine whether the Thriving Economy pillar achieves its fundamental objective: making Saudi Arabia’s prosperity sustainable beyond the oil era.