Saudi Arabia Exports

Economic growth decelerates in the first quarter of 2026

GDP growth exceeds estimates: Saudi Arabia's GDP expanded 3.0% in annual terms in Q1, following a 5.2% expansion in the previous quarter. While this marked the weakest reading since Q2 2024, it remained above the country’s three-year average and overshot market estimates. On a seasonally adjusted quarter-on-quarter basis, the economy contracted 1.2% in Q1, following a 1.3% expansion in the prior quarter. The quarterly decline was primarily driven by a drop in oil activities.

Drivers: Relative to the previous quarter's data, readings in Q1 softened for exports of goods and services (+1.4% in annual terms vs +11.2% in Q4) and imports of goods and services (-5.5% vs -0.3% in Q4). In contrast, readings strengthened for private consumption (+5.3% vs +3.2% in Q4), government consumption (+11.3% vs -8.5% in Q4) and fixed investment (+3.9% vs -4.9% in Q4).

Panelist insight: Commenting on the reading, Farouk Soussa, analyst at Goldman Sachs, stated: “A detailed breakdown of the numbers reveal a surge in government final consumption on a yoy basis and government capital expenditure. […] The surge in government spending is consistent with the Q1 fiscal data which showed a 20% increase in government spending yoy. Exports were up modestly on a yoy basis, despite our estimate of a ~45% decline in oil exports volumes in March due to the closure of the Strait of Hormuz. Imports, however, declined […], reflecting mainly supply chain disruptions, in our opinion (45% of Saudi imports come via the Strait of Hormuz). Offsetting the growth in government spending and net exports was a sharp decline in inventories (-89%yoy, -88%qoq), consistent with the decline in imports.” On the GDP outlook, Simon Williams, chief economist at HSBC, commented: “For 2026 as a whole, we see growth averaging around 2% – some 3ppt below the five-year average and well down on our pre-crisis projection. Nevertheless, the growth forecast is stronger than our expectations for the Middle East as a whole and masks a positive growth profile that sees the economy contracting in the first half of the year before returning to growth in H2 as the impact of the crisis fades. […] The forecast is premised on a sharp rise in oil exports as traffic through the Strait of Hormuz normalises and OPEC keeps production quotas loose amid global inventory restocking. But we also look for non-oil activity to firm as confidence recovers and supply-chain disruption fades.”

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