The Kingdom of black gold is moulting. Once defined almost entirely by oil, Saudi Arabia is now grafting tourism, entertainment, luxury, and digital industries onto the economic body, creating a hybrid that looks less like a petrostate and more like a restless upstart.
In Q2 2025, non-oil revenues climbed 7% year-on-year to SAR 149.86 billion (USD 40 billion), now 49.7% of government income. Oil revenues, battered by OPEC+ cuts, sank nearly 29% to SAR 151.7 billion, leaving the budget almost evenly split for the first time.
Only a year ago, non-oil revenues hovered below 40%. The jump suggests momentum, but the question lingers: Is this metamorphosis or just fiscal sleight of hand?
What’s Fuelling The Engine Without Oil?
Taxes remain the anchor. VAT and excise duties alone pumped in SAR 74.95 billion—half of all non-oil revenue. Fees added another 19%, corporate taxes and zakat SAR 26 billion, and income and capital gains taxes SAR 13.7 billion.
The VAT shock therapy implemented in 2018, which tripled in 2020, fundamentally restructured Saudi finances. However, it is not only taxation that is contributing to this transformation. Non-oil GDP grew by 4.9% in early 2025, indicating that genuine growth is emerging beyond mere bureaucratic adjustments.
Tourism is now the crown jewel of diversification. Foreign visitor spending hit SAR 49.4 billion (USD 13.2 billion) in Q1 2025, the fastest rise in the G20. Arrivals jumped from 18 million in 2016 to 30 million in 2024. Domestic trips doubled to 86 million, proving appetite at home is as ravenous as abroad.
The Kingdom already smashed its 100-million-visitor target years ahead of schedule and now sets its gaze on 150 million by 2030. Red Sea resorts, AlUla, and Diriyah function less like projects and more like monuments to ambition, backed by slick e-visas and futuristic infrastructure.
Tourism produced a balance-of-payments surplus of SAR 26.8 billion in early 2025, flipping the script so inbound spending outweighs outbound. Pilgrimage remains sacred, but leisure and heritage tourism are rewriting Saudi Arabia’s global image.
Riyadh Rocks While Wallets Open
Ten years ago, entertainment barely existed. Today, it is a juggernaut. Riyadh Season 2024 lured 19 million visitors, while more than 400 events gathered nearly 77 million. Money that once leaked abroad is now being spent on local thrills, with foreign tourists adding to the carnival.
Cinemas, reintroduced in 2018, turned Saudi Arabia into one of the fastest-growing film markets on Earth. Concerts, prize fights, and Formula 1 races are transforming Riyadh into a regional playground. The sector is not only fattening wallets but also reconfiguring culture and rewriting the social contract.
The digital economy is Saudi Arabia’s new adrenaline shot. It contributes 15.6% of GDP and continues to surge. Investments in 5G, cloud, and e-commerce have ignited a start-up fever. E-commerce registrations jumped 24% in 2023.
The ICT sector hauled in SAR 236 billion in revenue, while the Kingdom courts artificial intelligence (AI), gaming, and fintech. This is more than revenue diversification—it is an attempt to hardwire resilience into the economy by building skilled jobs and industries that cannot be sunk by the next oil slump.
Transformation Or Just Creative Accounting?
Progress is visible and loud. Retail, tourism, finance, and transport are sprinting. Nearly one million people work in tourism, up from 683,000 in 2020. Women are entering the workforce in numbers that would have been unthinkable a generation ago. The scaffolding of a post-oil economy is clearly under construction.
Yet sceptics point out that much of this diversification rests on taxes, fees, and oil-financed mega-projects under the Public Investment Fund. Some of these spectacles may attract global buzz without delivering durable demand. The neat 50-50 split in Q2 was also flattered by temporarily weak oil revenues; a rebound could easily tilt the balance back.
Saudi Arabia has cracked open new pillars of growth. Tourism, entertainment, and digital industries now generate nearly half of state revenue. That is no small feat.
But oil wealth remains the quiet benefactor underwriting much of this evolution. Until new industries stand on their own legs, diversification risks look like an oil-funded detour rather than an oil-free destiny.
Halfway to 2030, the Kingdom has momentum. The challenge is not just to build shiny new sectors, but to make them self-reliant, globally competitive, and shock-proof. The milestone is real. Whether it becomes the new normal will decide if Saudi Arabia truly escapes the gravitational pull of oil.