Arab Economic Growth Achieves 1.7% in 2025, 2026 Holds Promise

Post by : Mara Rahim

The Arab Investment & Export Credit Guarantee Corporation, known as Dhaman, announced that Arab GDP saw a growth of 1.7 percent in 2025, totaling around US$3.8 trillion. This progress is noteworthy given the ongoing political and economic challenges in the region. Key contributors to this figure include Saudi Arabia, UAE, Egypt, Algeria, and Iraq, which collectively represent about 73 percent of the region's GDP.

Looking ahead, Dhaman anticipates further growth in 2026, predicting a 5.6 percent increase in GDP, positioning it at approximately US$4 trillion. This positive forecast encompasses 19 Arab nations, including eight oil-rich countries that account for more than 70 percent of Arab GDP. Analysts express optimism that mitigating regional conflicts and implementing economic reforms will bolster trade and services.

In 2025, various countries within the Arab region experienced contrasted economic results due to fluctuating global oil prices, geopolitical uncertainties, and social pressures. The IMF has pointed out that while some nations struggled, others maintained a steady economic performance. Despite these challenges, GDP measured by purchasing power parity climbed by 6.1 percent to surpass US$9.8 trillion, and is projected to exceed US$10 trillion in the coming year.

The unemployment rate in Arab nations saw a slight decline to 9.4 percent in 2025, with forecasts suggesting it could drop further to 9.2 percent by 2026. Moreover, inflation rates decreased across 16 Arab nations, with consumer price growth averaging 10.3 percent in 2025, a trend expected to persist and reduce to 8.1 percent in the following year.

Seven Arab currencies, including the Tunisian, Qatari, UAE, Moroccan, Algerian, Djiboutian, and Syrian were strengthened against the US dollar, while others remained stable or faced devaluation. Total investments among 14 Arab states rose by 5.2 percent, reaching about US$864 billion in 2025, with projections suggesting this will exceed US$910 billion in 2026.

Government indebtedness in the Arab region increased to 46.2 percent of GDP in 2025, likely to exceed 47 percent in 2026. External debt rose to 54.6 percent of GDP, with a slight anticipated increase next year. The current account surplus narrowed to US$63 billion in 2025, approximately 1.7 percent of GDP, and is forecasted to decline to US$41.5 billion next year.

Furthermore, Arab foreign exchange reserves improved by 3.4 percent, reaching around US$1.2 trillion, adequate for covering imports of goods and services for about 5.6 months. These reserves are expected to rise by 2.5 percent in 2026, providing slightly enhanced coverage at 5.7 months.