FX.co ★ Saudi Arabia GDP Contracts for First Time Since 2023

Saudi Arabia’s economy contracted by 4.7% year-on-year in the second quarter of 2026, a slight upward revision from the preliminary estimate of a 4.8% decline and a sharp reversal from 3.0% growth in the previous quarter. This was the first year-on-year decline since the fourth quarter of 2023 and was driven primarily by a 24.8% slump in oil activities, compared with 2.9% growth in Q1. The oil sector was hit hard by ongoing US–Iran tensions that disrupted shipping through the Strait of Hormuz, a critical chokepoint for global oil and LNG trade.

Non-oil activities also lost momentum, expanding by just 0.9% compared with 2.8% in the previous quarter. Government activities moderated as well, growing 0.9% after a 1.5% increase in Q1.

On a quarter-on-quarter basis, GDP shrank by 4.8% in Q2. This decline was largely attributable to a 21.6% drop in oil activities and a 0.4% decrease in non-oil activities, which more than offset a modest 0.2% increase in government activities.