How fast conservative Saudi Arabia is changing

Last Updated on May 15, 2024 8:27 am

Saudi Arabia was once known as the most conservative country in the Middle East region. But Saudi Arabia is one of the societies in the world that are currently undergoing rapid change. At the same time, the country has economic ambitions. The country is moving forward with an economic plan to match this change.

Although Saudi Arabia has a king as its ruler, the real power rests with Crown Prince Mohammed bin Salman. Female employment in the country has doubled under him. The industry that provides all the facilities and infrastructure for entertainment and vacationing was non-existent in Saudi Arabia. Now that industry is running in full swing in the country.

Compared to the regional stock markets, Saudi Arabia’s stock market was blazing. But since 2022, 70 companies have come up with IPOs in this market. Dubai-based East Capital senior consultant Emer Akakmak believes that the Saudi stock market has achieved 50 years of progress in the last 10 years.

Everyone knows Mohammed bin Salman as MBS. It seems that the prince, who is only 38 years old, has attained a certain age in the game of geopolitics. Dissident journalist Jamal Khashoggi was murdered six years ago. Allegations that he had a hand in the murder made headlines in the media. But leaving that incident behind, MBS is considered to have moved forward a lot.

Riyadh is now involved in more defense cooperation with the US. On the other hand, he also has relations with China. China is now the largest buyer of Saudi oil. At the same time, Saudi Arabia has re-established diplomatic relations with its regional rival, Iran.

David Aserkoff, emerging markets strategist for Europe and the Middle East at investment bank JP Morgan, believes that cautious investors can benefit from this positive situation in Saudi Arabia. Investors typically look for companies that can achieve double-digit growth, he said. They are available in Saudi Arabia.

Saudi Arabia’s NEOM project is much discussed. The cost of this project has increased from 50 billion dollars to 1.5 billion dollars. It was said that The Line, known as the residential city of the future, will be built 105 miles long. However, its size has now been reduced to two miles.

But the biggest change has come in Saudi society. The average age of people in this society is 31, which means Saudi society is quite young now. This young Saudi society is enjoying all the changes brought by MBS.

According to the International Monetary Fund (IMF), Saudi Arabia’s non-oil economy will grow by 4 percent this decade. Shares in bodybuilding company Lizam Sports have risen 85 percent in the past 18 months. Shares of IT company Elm Core have doubled after winning the government’s digital operations contract.

Emer Akakmak, senior consultant at East Capital, said tourism-based companies, such as Budget Saudi Arabia or private educational institutions, such as Ata Educational, have become major players in the new Saudi economy.

The bond market is also developing rapidly in Saudi Arabia. The country’s 30-year Saudi paper bond yields 2 percent more interest than similar U.S. bonds. The country’s government debt is still less than 30 percent of GDP. And the amount of reserves is 44 thousand billion dollars.

But no one would describe MBS’s Saudi Arabia as entirely stable. The way he wants to modernize the country may backfire. Simon Henderson, director of Gulf and Energy Affairs at the Washington Institute, said, “I’m told by a very good source that the under-35s in Saudi Arabia love MBS, and the over-35s absolutely hate him.”

Iran is still a threat to Saudi Arabia. Tehran has made some progress in the race to acquire nuclear weapons. Israel would probably have to be recognized in order to get more defense assistance from the US. But in the current situation, it is not possible for MBS.

But if someone were to travel back in time a decade ago and look at the current situation in Saudi Arabia, they would be amazed at how the country has changed. As Simon Henderson says, any definition of success, MBS will fall within it. But there are still many ‘buts’ left for him.

Source: Barron’s.com