Moving Beyond Oil

Saudi Arabia is still widely seen as the classic oil state, with all the dysfunction that label implies. So it may come as a surprise that today it flourishes mostly outside the oil patch. In 2005, non-oil activity should grow by 6 percent, three times faster than the oil industry and its fastest clip in more than two decades, estimates the Samba Financial Group. Brad Bourland, Samba’s American-born chief economist, says that the real excitement in Saudi Arabia today “has nothing to do with oil.”

Since the late 1990s, Crown Prince Abdullah has been trying to reduce Saudi reliance on oil wealth. The result: construction and real-estate markets are booming, thanks to a move five years ago to allow foreign ownership of property. A revised banking law and low interest rates have energized the financial sector, and new lending last year matched oil revenue as a driver of money-supply growth. Since 1999, the non-oil sector has expanded far more steadily and strongly than the oil industry.
Newsweek