Saudi GDP contracts 3.8% in Q3 as oil activity falls 20.4%

Data from the General Authority for Statistics showed Saudi gross domestic product contracted 3.8% year on year in the third quarter of 2026, with oil activity down 20.4%, while the non-oil sector grew 1.9%. Real GDP shrank 4.8% last month.

On a quarterly basis, seasonally adjusted real GDP rose 1.3% in the third quarter, with oil activity rebounding 5.7% and non-oil activity growing 0.6%. Government activity was the only major component to contract, falling 1.2% quarter on quarter.

The International Monetary Fund expects the Saudi economy to contract 3.3% in 2026 before growing 7.9% in 2027, attributing the slowdown to disruptions to hydrocarbon production, shipping and broader economic activity caused by the Gulf conflict. S&P Global affirmed Saudi Arabia's A+ rating with a stable outlook, forecasting a 0.9% contraction this year.

EnterpriseAM concluded that oil is now doing the work state spending did earlier in the year, and that the quarterly rebound in oil activity points to the sector working through production and export disruption while government activity contracts after underwriting non-oil growth in the first half. It said the recovery now rests on crude volumes returning rather than on the state topping up demand.

What do these terms mean?

Gross domestic product: The value of all goods and services produced within a country's economy in a given period, used to measure the size of economic activity.

Oil activity: The part of the economy linked to extracting and producing oil and gas, affected by crude prices and production quotas.

Seasonal adjustment: A statistical adjustment that removes the effect of factors that recur every year, such as holidays and seasons, to compare performance between quarters more accurately.