Saudi Arabia GDP Hit Hard: 4.5% Yearly Decline in Q3 Due to Oil Supply Cuts

Saudi Arabia's economy experienced a significant contraction in the third quarter of 2025, with its real gross domestic product (GDP) shrinking by 4.5% year-over-year. Preliminary government data released Tuesday reveals the extent of the impact, primarily due to lower oil production and activities. This marks the most significant economic decline since 2025, fueled by deep cuts to oil output.

Key Factors Behind the GDP Decline

The General Authority for Statistics highlights that Saudi Arabia’s real gross domestic product (GDP) contracted by 4.5% in the third quarter compared to the same period a year ago. A preliminary statistics reveal a remarkable 17.3% decline in the gross domestic product (GDP) of the oil sector in Q3. This sharp contrast is particularly noteworthy.

Gross domestic product shrunk 4.5% in the third quarter compared to a year earlier, driven by a 17% drop in the oil economy, according to preliminary data by the General Authority for Statistics. These figures demonstrate the strong correlation between oil production and Saudi Arabia's overall economic performance.

Government Response and Future Outlook

Saudi Arabia’s finance minister said the kingdom would “take stock” of its spending priorities as it grapples with a sharp drop in oil revenue and the global tumult triggered by US economic uncertainties. The government says it’s increasingly focused on diversifying its economy and reducing its reliance on oil revenue, aiming for sustainable growth in the long term. While the oil sector remains crucial, diversification efforts are seen as vital for mitigating future economic shocks. Saudi Arabia's economy shrunk in the third quarter by 4.5% year-over-year, due to lower oil production and activities.