GDP growth slows in 1Q on oil disruption

Saudi Arabia’s GDP growth cooled in 1Q 2026 to 2.8%, marking its slowest growth rate since 2Q 2024 and falling from the 3.7% growth recorded in 1Q 2025, according to flash estimates from Gastat.

On a quarterly basis, GDP shrank 1.5% compared to 4Q 2025 on the back of oil activities dropping 7.2% q-o-q.

Blame the blockade: Oil activities expanded just 2.3% during the quarter, down from 10.8% in 4Q 2025. The slower growth came as the US and Israel’s war on Iran and disrupted shipments of oil through the Strait of Hormuz, which led to oil activities contributing just 0.7% of GDP growth.

Meanwhile, non-oil activities “were the main contributor to GDP growth,” accounting for 1.7 percentage points of the total and growing 2.8% y-o-y, down from 4.3% in 4Q.

REMEMBER- The IMF is expecting Saudi Arabia’s growth to average 3.1% in 2026, the fund said in its World Economic Outlook report last month. That figure is 1.4 percentage points lower than the Fund’s initial outlook in January. However, growth is expected to pick up pace again to 4.5% in 2027.