Saudi GDP Contracts 4.8% in Q2 2026 on Oil Decline

The Saudi economy contracted 4.8% year-on-year in the second quarter of 2026, according to flash (preliminary) estimates published in the national accounts section of the General Authority for Statistics (GASTAT). The decline marks the sharpest contraction since the COVID-19 pandemic period and reverses the 3.0% real GDP growth recorded in the first quarter of 2026.

The downturn was driven almost entirely by the oil sector. Real oil activities fell 24.7% year-on-year, subtracting about 5.4 percentage points from headline growth. In contrast, non-oil activities grew 0.6% year-on-year, while government activities rose 0.9%, showing that the broader domestic economy continued to expand modestly despite the overall figure.

On a seasonally adjusted quarter-on-quarter basis, real GDP fell 4.9% in Q2 2026, following a contraction in the previous quarter. Oil activities dropped 21.5% quarter-on-quarter, non-oil activities eased 0.5%, and government activities edged up 0.2%.

Why oil weighed on the numbers

The sharp fall in oil output and oil sector activity was linked to disruptions to oil production, including impacts connected to the closure of the Strait of Hormuz. Several analyses noted that the entire drag on headline growth came from the oil side, with the non-oil economy still expanding — with year-on-year non-oil growth estimated between roughly 0.6% and 1.7% depending on the measure used.

For residents and businesses across Riyadh, Jeddah and Dammam, the resilience of the non-oil and government sectors is the key signal to watch, as these areas most directly shape jobs, services and everyday economic activity. As preliminary figures, the Q2 2026 estimates may be revised in later releases.

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