Saudi GDP Contracts 4.8% in Q2 2026 as Real Estate Rises

Saudi Arabia's real GDP contracted 4.8% year-on-year in the second quarter of 2026, the first annual decline since the fourth quarter of 2023 and the steepest contraction since the COVID-19 pandemic period. On a quarter-on-quarter basis, the economy shrank by roughly 4.8% to 4.9% compared with the first quarter of 2026.

The downturn was driven mainly by oil activities, which fell by about 24.7% to 25% year-on-year and around 21% to 22% quarter-on-quarter. Disruption to oil production and exports linked to the closure or disruption of the Strait of Hormuz is cited as the main factor behind the sharp drop.

Non-oil segments held up far better. Non-oil activities grew about 0.6% year-on-year, and government activities rose around 0.9% year-on-year, partially offsetting the oil sector's decline. Sequentially, real non-oil GDP edged down about 0.4% to 0.5%. The Q2 result follows a stronger first quarter, when GDP expanded about 3.0% year-on-year with non-oil activities up around 2.9%.

Real estate rebounds

Despite the broader contraction, the property market showed renewed momentum. The Real Estate Price Index rose about 3.0% quarter-on-quarter and 1.3% year-on-year, ending two consecutive quarters of decline. Residential prices climbed about 3.7% quarter-on-quarter, led by residential land prices up around 6.1%, while apartment prices rose about 0.9%.

Residential transactions reached roughly 45,740 deals worth about 41.9 billion SAR, up 9% in volume and 6% in value versus the first quarter. For residents and buyers in Riyadh and Jeddah, the figures point to a housing market regaining traction even as headline growth weakens.

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