Saudi foreign investment falls 20% in war's first full quarter

Summary

• Net foreign direct investment into Saudi Arabia fell nearly 20% year-on-year, the lowest since 2024.
• Riyadh targets $100 billion in annual foreign investment by 2030 under its transformation program.
• Semafor Gulf reported the war is weighing on inflows as deficits widen.

The latest

Net foreign direct investment into Saudi Arabia dropped by close to 20% from a year earlier in the first full quarter of the war with Iran, falling to its weakest level since 2024, Semafor Gulf reported. The kingdom took in roughly $11 billion in net FDI in the first half of 2026, against an official goal of $100 billion a year by 2030.

Details

• The numbers: Net inflows fell nearly 20% compared with the same quarter a year earlier, the lowest reading since 2024, according to Semafor Gulf. Net FDI for the first six months of 2026 came in at about $11 billion, a pace far below what the kingdom's stated annual ambition requires.
• The target: Saudi Arabia aims to attract $100 billion in foreign investment a year by 2030 as part of Crown Prince Mohammed bin Salman's economic transformation program. Semafor Gulf reported that this year's figures make that long-term target harder to reach.
• Why capital matters: Outside capital sits at the center of the kingdom's development plans, according to Semafor Gulf, particularly as the government works to expand the private sector. The reliance on foreign money grows as domestic fiscal room narrows.
• The fiscal backdrop: Riyadh is adjusting spending as deficits mount, Semafor Gulf reported. That combination — widening deficits alongside softer foreign inflows — leaves less cushion for the capital-intensive projects underpinning the transformation agenda.
• The war timeline: The war with Iran began on Feb. 28, and the quarter covered by the new figures is the first full quarter since fighting started. Semafor Gulf attributed the drag on FDI to the conflict.
• Stocks diverge: Saudi equities have rebounded since the war broke out and outperformed regional peers, which Semafor Gulf linked to the kingdom's continued ability to export crude. The recovery has not erased the initial hit.
• The market gap: The Tadawul index remains down 3% since Feb. 28, while the MSCI Emerging Markets Index has risen 6% over the same period, Semafor Gulf reported — a 9-point spread between Saudi stocks and the broader emerging-market benchmark.
• What was not detailed: The reported figures cover net inflows without a breakdown by sector or country of origin, and no revised annual projection for 2026 was given alongside them.

Background

The $100 billion annual FDI goal is a pillar of the Saudi economic transformation program, which seeks to diversify the economy away from oil revenue by drawing private and foreign capital into non-energy sectors.

Between the lines

The two datasets point in opposite directions. Equity investors, who can exit in a day, have largely returned on the strength of uninterrupted crude exports. Direct investors, who commit capital for years, have pulled back — and the Tadawul's 3% decline against a 6% emerging-market gain suggests even the market recovery is relative, not complete. The gap between the $11 billion half-year pace and the $100 billion annual target is the harder problem.

What's next

Watch third-quarter FDI data for whether the decline deepens or stabilizes, the 2027 budget for how Riyadh handles widening deficits, and whether officials restate or adjust the 2030 investment target.

Source: Semafor Gulf