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Saudi Arabia’s move this week to allow women in the Kingdom to drive could potentially boost the Kingdom’s economic output by $90 billion by 2030, Bloomberg Intelligence said in a report on Thursday.
While the gains of the decision may take some time to be realized, higher female engagement in the labor market is likely to substantially boost the total supply of labor. This, in turn, will cause GDP to grow faster over the next decade, said Ziad Daoud, Middle East Economist at Bloomberg Intelligence.
Saudi Arabia’s Vision 2030 economic reform plan, unveiled last year, aims to increase women’s participation in the labor market to 30 percent.
Currently, only 20 percent of Saudi females are economically active.
According to Bloomberg Intelligence research, adding just 1 percentage point to this figure every year could add 70,000 more women annually into the labor market.
“While not all of these women may find work, even assuming a structural unemployment rate for women of 17 percent means the growth consequences are sizable. This could lift potential GDP growth by up to 0.9 percentage points a year,” Daoud said.
Should this be realized, the Kingdom’s GDP would be around $90 billion larger by 2030 than it would have been if the ban had remained in place, he added.
Saudi ruler King Salman issued on Tuesday a historic decree allowing women to drive for the first time, after years of activism and campaigning by women in the Kingdom.
In the decree, the King said that driving licenses are to be granted to women who want them.
Government agencies have been ordered to prepare reports for the process within 30 days, and the decree will be implemented by June 2018. A committee will also be formed to look into how to implement the order.
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