Economy records slowest increase since Q2 2024 in Q1

GDP reading: According to a preliminary estimate from the General Authority for Statistics, annual GDP growth slowed to 2.7% in the first quarter, down from 4.4% in the fourth quarter of last year and marking the softest growth since Q2 2024. The print came in below market expectations. Conversely, on a seasonally adjusted quarter-on-quarter basis, economic growth improved to 0.9% in Q1, following the previous quarter's 0.8% increase and marking the fastest expansion in a year. The statistical office also revised past GDP data, citing a methodological change aimed at aligning more with international data quality standards.

Drivers: As has been the case since early 2023, annual GDP growth was driven by government activities and the non-oil private sector—despite the latter slowing from the prior quarter—which likely continued to be boosted by the government’s diversification agenda. In contrast, the oil sector shrank.

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