Saudi Arabia's economy grows 2.8% in Q1 as non-oil sector expands

01/05/2026 03:47 AST

Saudi Arabia's real gross domestic product saw an annual expansion of 2.8 percent in the first quarter of 2026, driven by gains across all economic activities, official data showed.

According to flash estimates by the General Authority for Statistics, non-oil activities in the Kingdom increased by 2.8 percent year on year over the three-month period, underscoring the progress of the nation's economic diversification agenda.

Saudi Arabia's strong economic growth in the first quarter amid heightened regional conflicts reflects the nation's robust financial landscape and progress in non-oil activities.

The International Monetary Fund this month forecast Saudi Arabia's economy would grow 3.1 percent in 2026, citing continued strength in domestic activity and reforms aimed at broadening the economic base.

In its latest report, GASTAT stated: "This increase (in real GDP) was driven by growth across all main economic activities, as non-oil activities rose by 2.8 percent, oil activities recorded of 2.3 percent increase, and government activities grew by 1.5 percent year-on-year."

According to the authority, non-oil activities were the main contributor to real GDP growth, contributing 1.7 percentage points, followed by oil activities at 0.7 pp, government activities at 0.3 pp, and net taxes on products at 0.2 pp.

Jihad Azour, director of the IMF's Middle East and Central Asia Department, said earlier this month that Saudi Arabia has built strong financial institutions and diversified revenue streams, giving policymakers greater flexibility in navigating regional pressures.

On a seasonally adjusted basis, however, real GDP contracted 1.5 percent quarter on quarter, according to GASTAT. This decline was primarily driven by a sharp 7.2 percent drop in oil activities, partially offset by modest increases of 0.2 percent in non-oil activities and 0.8 percent in government activities.

Oil activities were the main contributor to the decline in seasonally adjusted real GDP as they reduced growth by 1.7 percentage points.

On a positive note, non-oil activities and government activities each contributed 0.1 percentage points to the Kingdom's seasonally adjusted GDP.

Saudi Arabia's strong economic performance in the first quarter comes after robust full-year 2025 growth of 4.5 percent, fueled by higher oil output and sustained non-oil momentum.

Arab News