Saudi Arabia’s economy contracted 3.8% year-on-year in the third quarter of 2026, following a 4.7% decline in the previous quarter, according to preliminary estimates from the General Authority for Statistics (GASTAT).
The contraction marked the second consecutive quarter of negative annual growth, largely reflecting disruptions to oil production and transportation amid the ongoing conflict in the Middle East.
Oil-related economic activity declined 20.4% from a year earlier, compared with a 24.8% contraction in the second quarter. Shipping disruptions through the Strait of Hormuz continued to affect the energy sector, a major component of Saudi Arabia’s economy.
Government activities also declined 2.7% year-on-year, reversing a 0.9% increase in the previous quarter.
Non-Oil Sector Growth Accelerates
Despite the overall contraction, non-oil activities expanded 1.9% annually, accelerating from 0.8% in the second quarter.
The performance partially offset the decline in oil-related activity and reflected continued growth in sectors outside petroleum production.
The development is particularly relevant to Saudi Arabia’s Vision 2030 economic diversification strategy, which seeks to increase the contribution of non-oil industries to national output.
Quarterly GDP Returns to Growth
On a quarter-on-quarter basis, Saudi Arabia’s GDP increased 1.3% in the third quarter, recovering from a 4.8% contraction in the preceding three months.
Oil activities expanded 5.7% during the quarter, following a 21.6% decline in the second quarter.
Non-oil activities also returned to growth, increasing 0.6% after a 0.4% contraction.
Government activities, however, declined 1.2%, compared with a 0.2% increase in the previous quarter.
The preliminary figures show a smaller annual contraction alongside a quarterly recovery in economic activity. The estimates remain subject to revision as additional statistical information becomes available.
