Flash estimates showed the sharpest contraction since the pandemic, as oil slumped and regional conflict disrupted trade and exports despite modest gains in non-oil and government activity.
Saudi Arabia’s economy shrank 4.8% year on year in the second quarter of 2026, the steepest decline since the COVID-19 pandemic, as a 24.7% plunge in oil activities outweighed modest growth in the non-oil and government sectors. The reading marked a sharp reversal from the first quarter’s 3% expansion. Oil activities cut 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 quarterly basis, GDP fell 4.9%, driven largely by a 21.5% contraction in oil activities, while non-oil activities slipped 0.5% and government activities rose 0.2%. The figures came as war in the Middle East and a near halt in shipping through the Strait of Hormuz disrupted Saudi trade and oil exports, with the International Monetary Fund saying crude rerouted through the East-West pipeline to Red Sea ports helped limit the drop in deliveries and higher oil prices partly offset lower export volumes. The IMF expects the economy to grow 1.7% in 2026 and 5.5% in 2027 as energy production and maritime transportation gradually normalize.