Growth Cools From First-Quarter Pace Despite Forecast Beat
The Kingdom's economy grew 1.9 percent year-on-year in the second quarter of 2026, easing from 2.8 percent growth in the first quarter and marking its slowest pace of expansion in a year, according to the National Economic and Social Development Council (NESDC). On a seasonally adjusted basis, output contracted 0.2 percent quarter-on-quarter, pointing to a softer handoff into the middle of the year even though the annual figure came in ahead of most economists' forecasts. Despite the deceleration, NESDC officials said the underlying data was strong enough to prompt an upward revision to the full-year growth outlook, now projected at between 2.0 and 2.5 percent, with a midpoint estimate of 2.2 percent.
Growth in the second quarter was driven by a 9.1 percent increase in total investment and a 17.6 percent rise in the value of goods exports, alongside continued expansion in the tourism sector. However, private consumption growth slowed sharply, rising just 1.9 percent year-on-year compared with 3.3 percent in the previous quarter, suggesting households are becoming more cautious amid broader economic uncertainty.
Energy and Travel Sectors Cited as Headwinds
Analysts pointed to softness in energy-related output and slower growth in travel-linked spending as key drags on the quarter's performance, even as exports and investment provided an offsetting boost. The mixed results reflect a broader pattern seen across the year so far, with external demand and capital spending helping cushion the economy against weaker domestic consumption. NESDC's upgraded full-year forecast suggests officials expect momentum to hold up in the second half of 2026, supported by continued export strength and a recovery in tourist arrivals during the peak season. The council's projection will be closely watched in the coming months as a gauge of whether the Kingdom's economy can sustain growth near the top of its revised range amid ongoing global trade uncertainty and shifting regional demand patterns.
