Saudi Arabia’s economy shrank 3.8% year-on-year in the third quarter of 2026, after contracting 4.7% in the previous quarter, preliminary estimates showed. It was the second straight quarter of economic contraction, as oil activities slumped 20.4%, following a 24.8% plunge in Q2, due to the ongoing Middle East conflict that disrupted shipping through the Strait of Hormuz. The contraction was also accompanied by a 2.7% decline in government activities, after rising by 0.9% in Q2. However, the economic contraction was partly offset by faster growth in non-oil activities, which rose 1.9%, compared with 0.8% in Q2. On a quarterly basis, the economy expanded by 1.3% in Q3, recovering from a 4.8% contraction in Q2, driven by rebounds in oil activities (5.7% vs -21.6% in Q2) and non-oil activities (0.6% vs -0.4%), while government activities fell by 1.2%, compared with a 0.2% increase in Q2.