The Rise of Saudi Arabia: Manufacturing and Healthcare
Part 4 of 4
Manufacturing and healthcare are expected to account for 24% of Saudi Arabia’s GDP compound annual growth rate into 2030. This part of the series will provide an analysis of these two industries and their expected changes as part of the country’s evolution.
KSA’s GDP is as Large as All Other GCC Countries Combined
Saudi Arabia has the largest GDP in the Gulf Cooperation Council (GCC) and the Middle East and North Africa (MENA) region. The chart below compares the kingdom’s GDP to its GCC counterparts.
Advanced manufacturing is a major focus for KSA’s into 2030. The region’s strong position in industrials and large-scale manufacturing can become compounded as its trade position and openness increases to levels similar to the UAE and Bahrain. Manufacturing is expected to be the greatest driver of the economy into 2030.
Healthcare is another major driver of government spending. Projects in healthcare equipment, medical devices, pharmaceuticals, and services are on the rise and generally sponsored, in whole or in part, by the government.
KSA Manufacturing is on the Rise
Saudi Arabia manufactures a range of goods. Some private companies are using the country to produce locally already, including international firms such as Isuzu, which opened a truck assembly plant in the kingdom in 2012. Continued competitiveness requires a skilled and more productive workforce, stronger legal and investment protection, and the removal of a range of obstacles that hinder business, including high-import duties, lengthy customs and visa procedures, and gaps in local supply chains.
- Saudi Arabia has made value-added manufacturing services a priority since 1995.
- This growth has slowed in recent years as the country tries to balance supply and demand with its capabilities.
- KSA can be a manufacturing hub in the MENA region if it builds the infrastructure, competes on price, and develops the necessary capabilities to meet consumer demand.
KSA Health Expenditures are Focused on Programs and Wages
Healthcare was one of the greatest beneficiaries of public spending during the oil boom, and there was a large-scale buildup of healthcare infrastructure including 81 new hospitals. The kingdom will need to continue spending heavily on healthcare to care for its aging population.
KSA needs more healthcare workers. Just one in three healthcare professionals is a Saudi national, and there are not enough healthcare graduates to replace professionals who retire or leave their jobs. To reverse this trend, several initiatives are being implemented to improve the perception of the healthcare professions and to provide educational capacity at colleges, universities, and appropriately equipped teaching hospitals.
The final part of this five-part series will combine this into a cohesive, actionable framework that gives businesses from outside KSA steps for achieving success inside the country.
Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance | McKinsey and Company