Saudi Arabia's real gross domestic product contracted 3.8% year over year in the third quarter of 2026, driven by a 20.4% plunge in oil sector activities following regional conflict and disruptions in the Strait of Hormuz. Despite the overall contraction, non-oil sector growth accelerated to 1.9%, supported by alternative Red Sea export pipelines and financial reserves that the IMF notes position the kingdom better than Gulf neighbors facing double-digit declines.
Overall Q3 2026 GDP performance
- ▪On a seasonally adjusted basis, Saudi Arabia's real GDP grew 1.3% in the third quarter of 2026 compared to the second quarter of 2026.
- ▪Preliminary General Authority for Statistics data released November 1, 2026, shows Saudi Arabia's gross domestic product declined 3.8% year over year in third-quarter 2026, following a 4.7% second-quarter decline—its first consecutive quarterly annual declines since 2023.
Sector-specific Q3 2026 economic performance
- ▪Saudi Arabia's non-oil private sector Purchasing Managers' Index rose to 55.3 in September 2026 from 53.8 in August 2026, according to the government's DataSaudi platform.
- ▪On a seasonally adjusted quarter-over-quarter basis, Saudi oil activities increased 5.7% in the third quarter of 2026 after declining in the second quarter.
- ▪Saudi Arabian oil sector activity fell 20.4% year over year in the third quarter of 2026, subtracted 4.7 percentage points from real GDP growth, and improved from a 24.8% contraction in the second quarter of 2026.
- ▪Saudi non-oil activities grew 1.9% year over year in the third quarter of 2026, accelerating from 0.8% growth in the second quarter and contributing 1.1 percentage points to annual real GDP growth.
Oil export pipeline disruptions
- ▪Saudi Arabia partially offset oil export disruptions caused by conflict in the Strait of Hormuz by redirecting crude shipments through an east-west pipeline to a Red Sea export terminal.
- ▪The pipeline connecting Saudi Arabia's eastern oil fields to the Red Sea terminal experienced a temporary shutdown in September 2026 following attacks before crude exports recovered.
IMF economic forecasts and regional comparison
- ▪The International Monetary Fund stated that Saudi Arabia's financial reserves and alternative oil export infrastructure cushion economic damage better than several neighboring Gulf countries.
- ▪The International Monetary Fund projected that Bahrain, Iraq, Kuwait, and Qatar will experience double-digit economic contractions in 2026 followed by double-digit expansions in 2027.
- ▪The International Monetary Fund's October 2026 World Economic Outlook projected Saudi Arabia's economy will contract by 3.3% in 2026 before expanding by 7.9% in 2027.
Houthi attacks and non-oil business uncertainty
- ▪Escalating conflict between Saudi-led forces and Iran-backed Houthi rebels in Yemen increased economic uncertainty for Saudi Arabia's non-oil businesses entering the fourth quarter of 2026.
- ▪In October 2026, missile and drone attacks by Iran-backed Houthi militants disrupted flights at Riyadh's airport, altered investment events, and interrupted financial district activity in Riyadh.
U.S.-Iran conflict disruptions
- ▪The eight-month conflict involving the United States and Iran triggered attacks on energy facilities across the Gulf region.
- ▪Regional oil production and shipping through the Strait of Hormuz were disrupted following United States and Israeli strikes on Iran on February 28, 2026.
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