Al-Shaal Report: Decline in GDP Reflects Economic Fragility

The Central Statistical Organization released its report on Gross Domestic Product (GDP) figures at current and constant prices for the first quarter of 2026, four months after the quarter ended. Notably, preliminary GDP data for Saudi Arabia, the region’s largest economy and among the top 20 globally, was released for the second quarter on July 30, just days after the Statistical Organization’s report on the first quarter was published.

The “Shal” report stated that GDP at current prices contracted by approximately 5.2%, reaching about 11.922 billion dinars, compared to roughly 12.581 billion dinars in the first quarter of 2025.

It added that GDP at constant prices, the more significant metric, contracted by approximately 4.6%, reaching about 10.011 billion dinars in the first quarter of this year, down from 10.497 billion dinars in the same quarter of 2025.

The Administration attributed the decline at current prices to a 16.0% drop in the oil sector’s value added, which fell to about 4.371 billion dinars from 5.206 billion dinars in the first quarter of 2025, due to lower oil production volumes. Meanwhile, the non-oil sector’s value added at current prices rose by 2.4%. At constant prices, the decline followed a 12.5% drop in the oil sector’s value added, while the non-oil sector’s value added increased by 1.9% during the same period.

The report noted that as the oil sector’s value added shrank, its contribution to GDP formation fell from 41.4% in the first quarter of 2025 to about 36.7% in the first quarter of 2026, excluding the contribution of other post-extraction oil activities. The public administration, defense, and social security sector accounted for about 13.6% of GDP formation, financial intermediation and insurance 10.7%, manufacturing 7.3%, transport, storage, and communications 6.8%, education 6.7%, and wholesale and retail trade, hotels, and restaurants 5.2%. It is evident how dependent these sectors are on the level of public spending.

“Shal” emphasized reiterating its long-standing point regarding the fragility of the economic structure and how sharply the economy contracted, noting that the oil sector was affected or its exports halted for only one month—March—while the war and the closure of the Strait of Hormuz began on February 28.