Saudi Arabia: Ending Driving Ban Could Boost Economy By $90 Billion

On June 24, as BBC reported, Saudi Arabia’s ban on women driving officially ended. The change was first announced in September 2017, and the country issued the first licenses to women earlier this month. Saudi Arabia, BBC noted, was the only country in the world where women could not drive.

That has now changed, so economists have jumped at the chance to analyze the impact lifting of the ban will have on Saudi Arabia’s economy. According to Bloomberg, allowing women to drive could add as much as $90 billion to Saudi Arabia’s economic output by 2030.

“Lifting the ban on driving is likely to increase the number of women seeking jobs, boosting the size of the workforce and lifting overall incomes and output. But it’ll take time before these gains are realized as the economy adapts to absorbing growing number of women seeking work,” Ziad Daoud, Dubai-based chief Middle East economist for Bloomberg Economics said.

The maneuver will likely add about 70,000 more women a year to the labor market, which could lift the potential economic growth by approximately 0.9 percentage points a year. A secondary effect, according to Saudi Energy Minister Khalid Al-Falih, will naturally be higher gasoline demand.

Part of reforms pushed by King Salman’s son, Crown Prince Mohammed bin Salman, the lifting of the driving ban was, according to Al Jazeera, done for two reasons: to transform the economy of the world’s top oil exporter and to open up its society.

Ironically, and perhaps indicatively, the lifting of the ban was accompanied by a crackdown on activists and campaigners, women who had previously campaigned against the ban, Al Jazeera noted. Six Saudi Arabian women remain jailed for their activism. They were jailed about a month before the ban was first announced.

Ending the driving ban will boost Saudi Arabia’s economy by $90 billion by 2030 https://t.co/lKt2KgqXy2

— Quartz (@qz) June 27, 2018

According to market intelligence publisher Euromonitor, the female labor force participation rate in Saudi Arabia will rise from 17 percent in 2017 to over 24 percent by 2030. This, according to Euromonitor’s analysts, should translate into higher productivity, a more competitive labor market, increased incomes, and result in economic growth. Likewise, more money will stay in the Saudi economy, instead of going abroad.

According to Euromonitor’s predictions, women will mostly fill positions in retail and services sectors, but there could also be an increase in small businesses since Crown Prince Mohammed bin Salman’s reforms will also allow women to start businesses without the permission of a male guardian. Furthermore, money will be saved on employing drivers for women, since the drivers were usually foreign expatriates, and therefore part of the low-skilled unproductive labor force.