Saudi Arabia’s GDP fell 3.8% in third quarter — Asharq Al-Awsat
Saudi Arabia’s gross domestic product contracted by 3.8% year on year in the third quarter of 2026. The pace of decline slowed compared with the second quarter, when the economy shrank by 4.7%. According to Asharq Al-Awsat, the main factor was a 20.4% decline in oil activity, while the non-oil sector grew by 1.9% after increasing by 0.9% in the previous quarter.
Sector contributions
According to the General Authority for Statistics, oil activity reduced the overall GDP figure by 4.7 percentage points, while government activity subtracted another 0.4 points. At the same time, non-oil activity added 1.1 points, and net taxes on products added about 0.1 points.
On a quarterly basis, seasonally adjusted real GDP rose by 1.3%. Oil activity increased by 5.7% compared with the second quarter, non-oil activity grew by 0.6%, while government activity declined by 1.2%.
In the third quarter, economic conditions were affected by shipping disruptions through the Strait of Hormuz and the temporary shutdown of the East-West pipeline in September.
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IMF forecasts and the non-oil sector
Last month, the International Monetary Fund said that Saudi Arabia’s available fiscal reserves and alternative opportunities for oil exports help limit economic losses caused by the war. The Fund considered the country better prepared for the consequences of disruptions than other Gulf states.
The IMF forecasts a recovery of Saudi Arabia’s economy in 2027, with growth of 7.9% amid an expected revival in oil activity, trade and shipping. At the same time, the country’s government estimates that the economy will contract by 3.6% in 2026 and expects a budget deficit of 4.9% of GDP.
Abdullah Al-Mir, an economist at King Fahd University of Petroleum and Minerals, linked the resilience of the non-oil sector to government spending, private business activity and consumer expenditure. He also noted that the Riyad Bank Purchasing Managers’ Index reached 55.3 points in September and indicated expansion in the non-oil private sector for the sixth consecutive month. According to him, the share of non-oil activity rose to 57.3% of the economy, while unemployment among Saudi citizens fell to 6.5%.
