Saudi GDP Contracts 4.8% in Q2 2026 on Oil Drop

Saudi Arabia's economy contracted 4.8% year-on-year in the second quarter of 2026, The decline was driven mainly by a sharp fall in oil output during the quarter.

Oil activities dropped 24.7% year-on-year in Q2 2026, subtracting about 5.4 percentage points from headline real GDP growth. The reduction has been linked to lower oil production, including cuts that followed disruption around the Strait of Hormuz.

Away from the oil sector, the picture was more stable. Non-oil activities grew 0.6% year-on-year, while government activities expanded 0.9% over the same period, pointing to continued momentum in parts of the economy not tied to crude output.

On a seasonally adjusted quarter-on-quarter basis, real GDP fell 4.9% in Q2 2026 compared with the first quarter of the year.

Why it matters

The Q2 2026 result marks the first annual real GDP contraction since the fourth quarter of 2023 and the steepest since the pandemic period in 2020. For residents and businesses across Riyadh, Jeddah and beyond, the figures underline how closely the headline economy still tracks oil output, even as non-oil and government activities keep growing. The continued expansion in non-oil sectors offers a measure of stability for the wider community while the energy side adjusts.

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