Arab GDP Grows 2025 Despite Challenges, Positive Outlook for 2026

The Arab Investment & Export Credit Guarantee Corporation, also known as Dhaman, reported that the value of Arab GDP increased by 1.7 percent in 2025, reaching around US$3.8 trillion. This growth occurred despite regional political and economic challenges. Most of the GDP is concentrated in Saudi Arabia, UAE, Egypt, Algeria, and Iraq, which together contribute nearly 73 percent of the region’s total.

Dhaman said that the Arab economy is expected to continue growing in 2026. Forecasts indicate a rise of 5.6 percent in GDP to reach approximately US$4 trillion. This growth is expected in 19 Arab countries, including eight oil-producing nations, which make up more than 70 percent of the total Arab GDP. Analysts remain hopeful that regional conflicts will ease and economic reforms will help strengthen trade and services.

During 2025, the Arab region faced mixed economic results due to declining global oil prices, geopolitical risks, and social and economic pressures. The IMF reported that some countries struggled, while others maintained stable performance. Despite this, GDP based on purchasing power parity rose by 6.1 percent to over US$9.8 trillion and is expected to surpass US$10 trillion in 2026.

The average unemployment rate in Arab countries fell slightly to 9.4 percent in 2025. Experts predict it will continue to decrease to 9.2 percent in 2026. Inflation also eased in 16 Arab countries, with the average consumer price increase falling to 10.3 percent in 2025. This trend is expected to continue, reaching 8.1 percent in 2026.

Seven Arab currencies, including those of Tunisia, Qatar, UAE, Morocco, Algeria, Djibouti, and Syria, strengthened against the US dollar, while others remained stable or declined. Total investments in 14 Arab countries rose by 5.2 percent to reach about US$864 billion in 2025 and are projected to exceed US$910 billion in 2026.

Government debt in the Arab region increased to 46.2 percent of GDP in 2025 and may rise above 47 percent in 2026. External debt also grew to 54.6 percent of GDP, expected to slightly increase in 2026. The current account surplus fell to US$63 billion in 2025, or 1.7 percent of GDP, and may decrease to US$41.5 billion next year.

Arab foreign exchange reserves rose by 3.4 percent to roughly US$1.2 trillion, enough to cover imports of goods and services for about 5.6 months. These reserves are expected to rise by 2.5 percent in 2026, providing slightly more coverage at 5.7 months.