Bloomberg Intelligence analysis claims decision could generate as much income as the Saudi Aramco IPO
The decree on Wednesday by Saudi Arabia's King Salman bin Abdulaziz Al Saud allowing women to drive is set to boost economic growth, potentially adding about $90 billion to economic output by 2030, new research reveals.
This is comparable to the projected income generated by state oil giant Saudi Aramco’s planned initial public offering (IPO), research by Bloomberg Intelligence has found.
While the gains of this decision may take some time to be realised, greater female engagement in the labour market is likely to provide a substantial lift to the total supply of labour, causing GDP to grow faster over the next decade, the analysis states. Currently, only 20 percent of females in Saudi Arabia are economically active and increasing their workforce participation rate is one of the main targets of the National Vision 2030 programme.
The research finds that adding just 1 percentage point to the rate every year could add 70,000 more women a year into the labour 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, according to researcher Ziad Daoud, Bloomberg's Middle East Economist.
This could lift potential GDP growth by up to 0.9 percentage points a year, the research says. Should this be realised, the kingdom’s GDP would be around $90 billion larger by 2030 than it would have been had the ban had remained in place.
This amount is similar to what Saudi Arabia is trying to raise through the sale of a 5 percent share in Saudi Aramco.