Saudi Finance Ministry projects 3.6% GDP drop in 2026

Saudi Arabia's Ministry of Finance has issued a preliminary estimate projecting a 3.6% contraction in real gross domestic product (GDP) for 2026, revising a significantly more optimistic earlier outlook. The change is driven mainly by an expected decline in oil activity.

oil activity is forecast to fall by around 21.8% during 2026. This marks a sharp shift from the 2026 budget projection, which had anticipated real GDP growth of 4.6% rather than a contraction.

Away from the oil sector, the picture remains positive. Non-oil activities are expected to expand by approximately 3.2% over the year. In the first half of 2026, these sectors grew by 1.8%, lifting their share of total GDP to 57.3% — a sign that diversification efforts continue to broaden the economic base.

Inflation, meanwhile, is estimated at around 2.1% for 2026, pointing to relatively stable prices for households and businesses despite the shift in the headline growth figure.

Why it matters

For residents and business owners across the Kingdom, the key takeaway is that the projected contraction reflects lower oil output rather than weakness in the wider economy. The continued growth and rising contribution of non-oil sectors — now accounting for more than half of GDP — remains central to the Kingdom's long-term diversification goals. Steady inflation also suggests day-to-day cost pressures are expected to stay moderate through the year.

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