Saudi Economy Suffers Sharpest Contraction Since Pandemic

Saudi Arabia's economy has contracted by 4.8% year-on-year in the second quarter of 2026, marking its sharpest decline since the COVID-19 pandemic. The main driver of this contraction is a steep fall in oil activity and disruptions to crude exports caused by the war in the region.

The General Authority for Statistics reported that oil activities declined by 24.7% compared to the second quarter of 2025, while non-oil activities recorded limited growth of 0.6%. The government sector expanded by 0.9%, but this was not enough to offset the decline in the oil sector.

The war involving Iran has had a direct impact on Saudi oil exports, prompting the Kingdom to reduce production during the second quarter. According to Al Eqtisadiah, Saudi Arabia's oil production fell by 26% year-on-year to approximately 7.2 million barrels per day.