The decision to award Saudi Arabia hosting rights to the G20 Summit in 2020 marks an important milestone for the Kingdom.
This would be the first time the summit will be hosted in the Middle East and will help showcase the vibrancy of this region on a global stage.
Saudi Arabia is driving the world’s most ambitious economic transformation agenda, which greatly aligns to the G20 objectives. Vision 2030 is powered by economic and financial reforms, privatisation of key assets, development of brand new industries as well as the overhaul of existing sectors.
The decision by the world’s most powerful countries to award the event to Saudi Arabia is a nod to the Kingdom’s growing status as an international financial services hub.
The G20 was created to be a platform to discuss key economic and financial policy issues facing the world.
The group comprises the world’s largest economies along with the emerging markets. The G20 group represents 4.6 billion people, approximately USD69 trillion in GDP, which is almost 80 per cent of the global economy, according to MGM Research 1.
With a GDP of USD796 billion, Saudi Arabia is the 16th largest economy in the world and makes up 1.2 per cent of the G20’s GDP 2.
Despite representing a diverse group of countries with different interests, the G20 has always been focused on ensuring global economic growth, monetary stability, environment and technological innovations.
Growth During Uncertain Times
The International Monetary Fund predicts global economic growth will slow to its weakest level since the 2008 financial crisis as Brexit implications are still unknown and China and the US economies are losing momentum.
In October, the World Trade Organization (WTO) lowered trade forecasts due to rising tensions that have unsettled the global economy.
“World merchandise trade volumes are now expected to rise by only 1.2 per cent in 2019, substantially slower than the 2.6 per cent growth forecast in April,” the WTO said 3. “The projected increase in 2020 is now 2.7 per cent, down from 3.0 per cent previously. The economists caution that downside risks remain high and that the 2020 projection depends on a return to more normal trade relations.”
This is happening across a backdrop of a mass movement to tackle climate change, which calls for a huge shift in industries and government policies.
“A paradigm shift is needed where the virtuous cycle of environment and growth is accelerated through innovations, and with business communities playing an important role, in synergy with the public sector,” the G20 communique in Osaka noted. “To this end we stress the importance of accelerating the virtuous cycle and leading transformations to a resilient, inclusive, and sustainable future.”
As global trade slows and leaders grapple with complex issues, the meeting will really need, more than ever, to bolster international cooperation to deal with pressing challenges.
Saudi Arabia’s Transformation
Given that G20 is a moment-in-time for Saudi Arabia and the wider Middle East to highlight their transformation and growth opportunities, the interest in the Kingdom’s reform has been centre-stage for the last couple of years.
Vision 2030 is an acceptance that the oil driven economic model that has sustained the Kingdom for generations must evolve to meet the needs and fulfil the ambitions of its overwhelmingly young population.
Saudi Arabia is hoping to take a leadership role on some globally pressing issues as it prepares for the G20 Summit, such as climate change and energy transition.
Hi Royal Highness, Mohammed bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister and Minister of Defense, who led the Kingdom's delegation in Osaka, noted that Saudi Arabia is gaining speed in developing strong institutional frameworks to enhance stability in the oil markets and that energy security is a top priority 4.
The nation aims to develop about 60 gigawatts (GW) of renewable energy capacity in the next 10 years that could approximately power 45 million homes 5. That would comprise 40 GW of photovoltaic solar power, three GW of concentrated solar power and 16 GW of wind power.
In terms of growth, there are some immediate gains arising from the development of the service sector supported by the expansion and upgrade of Saudi Arabia’s infrastructure. Finance, insurance, real estate and business services GDP rose 3.16 per cent last year, while the combined wholesale, retail trade, restaurants and hotels sector grew 1 per cent, according to the General Authority for Statistics 6. Community, social and personal services, which include the education and healthcare sectors, surged 5.16 per cent in 2018, compared to the previous year.
2 G20 Nations GDP Rankings 2019
3 WTO lowers trade forecast as tensions unsettle global economy
4 HRH Crown Prince Participates, in the Climate Change, Energy, Environment Session, during G20 Summit
5 California’s 1-Gigawatt Solar Milestone: What Does It Mean?
6 Natioanl Accounts