Saudi Arabia to Scale Down Neom Megacity Project Amid Economic Challenges
Saudi Arabia is scaling down its Neom megacity project due to ongoing economic challenges, including low Brent crude oil prices. Originally budgeted at $500 billion, costs have surged to an estimated $1.5 trillion, prompting a redesign that may focus on data centers to support the nation's AI ambitions. Despite these changes, Neom faces tight deadlines to be operational by Expo 2030 and the 2034 World Cup, amid a projected budget deficit of 165 billion riyals for 2026.
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Saudi Arabia plans to significantly reduce the Neom megacity project due to economic pressures, with Brent crude oil prices remaining below $70 for nearly a year. An internal review is set to conclude, leading to a redesign of the project initially announced in 2017, which aimed to diversify the economy and attract foreign investment.
The original budget of $500 billion has ballooned to an estimated $1.5 trillion. Reports indicate Neom may shift focus to data centers, aligning with the country's ambition to become a hub for artificial intelligence.
Despite the planned modifications, Neom is under tight deadlines to be ready for Expo 2030 and the 2034 World Cup. Saudi Arabia anticipates a budget deficit of 165 billion riyals (approximately $44 billion) for 2026, influenced by stagnant oil prices and increased spending in priority sectors like industry, logistics, and tourism.
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