Saudi Vision 2030 Dynamic Input-Output Table: Computing Macroeconomic Forecasts with RAS Method

When an economy is in the midst of a transformation and diversification process, it is hard to assume that its sectoral composition and inter-industry transactions will remain unchanged. This is especially the case since substantial adjustments to a country’s economic structure are at the heart of any restructuring plan. This paper introduces an approach that combines macroeconomic forecasts with the RAS method to produce long-term projections of input-output tables (IOTs), with an emphasis on key targets of Saudi Vision 2030, Saudi Arabia’s blueprint for economic diversification. A significant advantage of the input-output framework is its high sectoral granularity, allowing it to capture the impacts of adjustments to final demand or government policies with respect to individual sectors. Our hybrid approach enables the introduction of different growth paths for the main variables, so that Vision 2030’s transformation plan is reflected appropriately in the projected IOTs. The framework is flexible enough to accommodate sudden adjustments with relative ease, such as the introduction of new technologies or entire sectors into the economy. Saudi Vison 2030 includes a set of targets relating to economic diversification, improved energy efficiency, the introduction of new technologies, social transformation and the support of selected emerging sectors. These policies are expected to have a substantial impact on the Saudi economy, underlining the need for an adequate and flexible tool for projecting and evaluating structural adjustments in the economy.