Saudi GDP seen contracting 3.6% in 2026 on oil dip

Saudi Arabia’s Ministry of Finance has revised its outlook for the national economy, now projecting that real GDP will contract by 3.6% in 2026, driven mainly by lower oil activity. The new estimate marks a sharp shift from the FY2026 budget, which had forecast real GDP growth of 4.6%.

oil activity is expected to fall by around 21.8% in 2026. At the same time, non-oil activity is set to keep expanding, with growth projected at roughly 3.2% — a sign that domestic sectors outside crude continue to perform.

Recent data reflects the same trend. The central bank reported that real GDP fell 4.7% year-on-year in the second quarter of 2026, including a 24.8% drop in oil activity over the period.

Outside forecasts have differed. In July 2026, the International Monetary Fund had projected real GDP growth of 1.7% for Saudi Arabia this year, before the latest national revision pointed to a contraction.

Why it matters

For residents and businesses across the Kingdom, the figures underline a familiar story: headline GDP is being pulled down by swings in oil output, while the non-oil economy — the part most people experience through retail, services, construction and tourism — is still growing. Continued non-oil expansion is central to the long-term goals of رؤية السعودية 2030, which aims to diversify income away from crude.

The revised numbers may influence government spending plans, hiring, and investment decisions in the months ahead. Saudi Living will continue to follow updates on the Kingdom’s economic outlook.

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