Saudi Arabia's economy contracted 4.8% year-on-year in the second quarter of 2026, marking the steepest decline since the COVID-19 pandemic. The contraction was driven by a sharp drop in oil activities, which fell 24.7% year-on-year, according to official estimates.
Saudi Arabia's real GDP contraction in Q2 2026, the largest since the pandemic.
Non-oil activities grew 0.6% year-on-year, while government activities increased 0.9%. However, the oil sector subtracted 5.4 percentage points from annual GDP growth, while non-oil activities added 0.4 percentage points, and government activities and net taxes on products each contributed 0.1 percentage points.
On a seasonally adjusted basis, real GDP fell 4.9% in the second quarter compared with the previous quarter. The quarterly decline was driven largely by a 21.5% contraction in oil activities. Non-oil activities decreased 0.5% quarter-on-quarter, while government activities rose 0.2%.
Oil activities made a negative contribution of 4.5 percentage points to the quarterly GDP reading. Non-oil activities and net taxes on products subtracted 0.3 and 0.1 percentage points respectively from quarterly GDP.
The estimates are generally released 30 days after the end of the quarter.
According to the International Monetary Fund (IMF), the figures reflect the impact of the war in the Middle East and the near halt in shipping through the Strait of Hormuz, which disrupted Saudi trade and oil exports. The IMF noted that redirecting crude through the kingdom's East-West pipeline to Red Sea ports had limited the decline in oil deliveries, and higher crude prices had helped offset lower export volumes.
The IMF expects Saudi Arabia's economy to grow 1.7% in 2026 before accelerating 5.5% in 2027, assuming energy production and maritime transportation gradually normalize.