Saudi Arabia’s economic growth slowed to 2.8% in Q1 of FY26: sharply down from 5% in the previous quarter. This decline follows the escalation of conflict involving Iran, with analysts suggesting that the ongoing turmoil may further exacerbate economic challenges in the months ahead.
The General Authority of Statistics reported that oil sector growth decelerated to 2.3% growth in Q1 FY26: a significant decrease from 10.8% in Q4 of FY25 as the Kingdom implemented production cuts in response to disruptions in oil exports.
Economists caution that Q2 may yield even poorer performance, as the initial figures only reflect the early stages of the conflict, with subsequent months revealing substantial economic strain citing prolonged investor uncertainty.
The IMF revised its GDP growth forecast for Saudi Arabia in FY26 from 4.5% to 3.1% in its latest Spring Meetings.
Analysts maintain that elevated oil prices, with Brent crude nearing $125 per barrel this week, will bolster government revenues and facilitate continued investment in the country’s Vision 2030 initiatives beyond geopolitical headwinds.
Robust oil revenues for 2026 and 2027 will be pivotal in sustaining government investment in infrastructure and development projects central to the Vision 2030 agenda.
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