How will Saudi Arabia's economy benefit from lifting the women's driving ban?
24 June marks a momentous occasion for women in Saudi Arabia; they will be legally allowed to drive for the first time. The move is a key part of Crown Prince Mohammed bin Salman’s Vision 2030 initiative, which aims to modernize and diversify the Gulf state’s petro-dependent economy, and make the country more attractive to would-be foreign investors. It also comes amid a wider reformist push, which saw many top officials purged late last year and the Crown Prince recently touring the West in an attempt to boost Saudi Arabia’s standing abroad.
Much has been said about the social significance of letting women behind the wheel, as a step towards greater gender equality and female empowerment. But the economic impact could be no less profound. Not only for specific automobile-related sectors—such as insurance, finance, driving schools and car companies, to name a few—but also at a macroeconomic level. Lifting the driving ban removes a major obstacle to women joining the labor market, and it could boost entrepreneurship and prove to be a boon for the retail and leisure sectors.
However, the reform also poses challenges. The future employment prospects of the roughly 800,000 drivers who work for women who were up until now not permitted to drive themselves are uncertain. The country’s current infrastructure is likely unprepared for a surge in car use, which could lead to greater congestion. And rather than boosting local car production, the reform could lead to a surge in car imports, weakening the country’s external position.
To talk in more detail about the potential effect of women driving on Saudi Arabia’s economy, we spoke to Euromonitor Senior Data Analyst Ana Solovjova and Data Analyst Arturas Ladyga.
Do you see the female labor force participation rate rising going forward? If so, to what level?
We expect the female participation rate to rise from around 17% in 2017 (according to Euromonitor International data) to over 24% by 2030.
What will be the impact of a higher participation rate on the economy?
[A] higher participation rate should translate into a more competitive labor market, higher productivity, increased incomes and a resulting boost to economic growth. Saudi Arabia’s economy should gradually move from oil dependence and become more diversified. The increased share of Saudis in the labor force should translate into more money staying in the economy rather than going abroad with foreign worker remittances.
Which types of jobs are women most likely to fill?
We expect women mostly to fill positions in retail and services sectors. There could also be an increase in small businesses, as the recent reforms allow women to start their own business without the permission of a male guardian.
What are the major barriers to increasing the female participation rate?
The major barriers to female participation in the labor force are the traditions and cultural beliefs that need time to change. Many workplaces in Saudi Arabia are still segregated; companies often have cultural resistance to hiring women; and a male guardian’s permission is required for a woman to work, study or travel. All of this makes entry of women into the workforce a challenge, even though Saudi women are as educated as men (according to Euromonitor International data, 49% of students in higher education in 2017 were women). In addition, as female education is seen as a means of personal fulfilment rather than a way to achieve professional success, most women seek higher education in the arts and humanities, creating a lack of educated workers in technical and scientific fields.
What will the economic impact be of allowing women to drive? How will productivity be affected by the lifting of the driving ban?
Improved mobility should make it easier for women to commute to work, resulting in more women participating in the labor force. This would spur productivity and incomes, resulting in higher economic growth. Money saved on employing drivers for women (mostly foreign expatriates who are a part of the low-skilled unproductive labor force in Saudi Arabia) would stay in the economy, meaning higher real incomes, improving labor productivity and more consumer spending. In addition, car sales should get a short-term boost.
Do you think the lifting of the driving ban will be the first of many reforms designed to boost the participation of women in the Saudi economy, and do you see economic diversification efforts being successful?
We expect the government measures to diversify the economy to a certain extent, although the change should be gradual, as the main challenge will be changing traditional values and cultural beliefs. We see the government taking steps towards its plan through various programs, a lot of which are aimed at helping women enter the workforce and employing their potential (such as removing the ban on driving, supporting self-employment, providing childcare for working women etc.). This shows that women will play an important role in the diversification. We believe more reforms concerning women’s rights should follow in order to exploit their potential and enable them to contribute to the economy.
What will happen to the many people who currently work as drivers for Saudi women, once women are allowed to drive themselves?
As most of the drivers are low-skilled unproductive foreign expatriates, we expect the largest part of them to become redundant over time and either shift to other jobs or be forced to return home.
How will car manufactures be affected by the lifting of the driving ban?
We expect there will be a short-term spike in car sales. Foreign companies will likely try to seize this opportunity by increasing production numbers.
Senior Data Analyst Ana Solovjova joined Euromonitor International in 2010 and is responsible for research and forecasting of annual and monthly/quarterly economic data. Ana holds BSc in Statistics from Vilnius University and MSc in Financial Economics from International School of Management, Vilnius.
Data Analyst Arturas Ladyga joined Euromonitor International in 2016 and is responsible for research and forecasting of annual and monthly/quarterly economic and socio-demographic data. Arturas holds BSc in Economics from Vilnius University and BSc in Banking from Vilnius University of Applied Sciences.
5-year economic forecasts on 30+ economic indicators for 127 countries & 30 commodities.
Author: Oliver Reynolds, Economist
Date: June 8, 2018
TagsUSA UK precious metals Sub-Saharan Africa Greece Turkey Iran TPP Russia Brexit Oil Gold Vietnam Portugal Colombia Consensus Forecast South Africa Company News G7 Infographic Nordic Economies Forex Africa Canada Exchange Rate Asia Eastern Europe India Precious Metals Commodities United Kingdom Investment European Union Commodities Agricultural Commodities Banking Sector Inflation Emerging Markets oil prices Cryptocurrency Unemployment rate Argentina France OPEC Spain Bitcoin Energy Commodities Tunisia Economic Growth (GDP) Healthcare Latin America Ukraine United States Germany Mexico Euro Area IMF MENA Venezuela Japan Trade Italy Brazil Australia Base Metals Commodities China Housing Market Major Economies
Although recent data suggests the economy is losing some steam, China will still record enviable growth this year.… https://t.co/RR5Yfrfq4n
1 hour ago
Indonesia's economy is expected to accelerate slightly compared to last year on faster growth in government consump… https://t.co/8y4Ii38BB6
3 hours ago
A swift economic recovery in early 2018 for Angola, following a prolonged recession over the past two years, does n… https://t.co/sDqUOpKp3p
5 hours ago
Nigeria's economy is seen gaining steam this year thanks to higher oil prices and improved foreign exchange rate li… https://t.co/XEH6oqGxdA
7 hours ago
Although firmer commodity prices and recoveries in Sub-Saharan Africa’s largest economies should support stronger a… https://t.co/ECUfQyJfgh
7 hours ago
- Italy’s New Populist Government and the Eurozone: Prelude to a Crisis?
- Latin America moves toward increased integration as U.S. protectionism grows
- How can Latin America increase productivity without affecting the quality of employment?
- How will Saudi Arabia's economy benefit from lifting the women's driving ban?
- Which countries are the most prepared for the upcoming digital revolution?
- India Under Pressure from the U.S. on Trade Policy
- The Story of Steel
- Latin America is the World Leader in eCommerce Growth Despite Serious Challenges
- What the TPP means for trade in Latin America
- Elections in Russia: Analysis and Implications
- 2018 & 2019 Economic Outlook for the Top Oil Producing Countries
- Nearly a Third of Latin Americans Have No Right to a Pension
- A Look at Healthcare Models Around the World
- The Poorest Countries in the World
- Newly-elected Chilean President Sebastian Piñera faces a myriad of challenges - economic and otherwise
- The Economic Effects of Trade Protectionism
- Regional Disparity: The Dark Side of Inequality in Latin America
- Coal: The story of the world's most abundant fossil fuel
- Venezuela's Electoral Conundrum
- Gold: The Most Precious of Metals (Part 3)
- Trump's 1st Year: 95 Analysts Surveyed on U.S. Economy
- The Latest on China and What's in Store for 2018
- An in-depth look at the Eurozone’s booming economy and the challenges that lurk in the shadows
- China’s growing influence on the Latin American economy
- Top Economics & Finance Blogs of 2018
- How Latin America emerged from recession in 2017
- Is this the beginning of the end for Bitcoin?
- Risks and Opportunities for 2018 - Daniel Lacalle
- Emerging Markets 2018 Economic Outlook
- The role of FDI in Vietnam’s socio-economic development
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- How will emerging market economies perform in 2017?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- 4 Key European Elections That Will Impact the Economy in 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit