Arab economies seen growing further in 2025 and 2026

The gross domestic product of Arab nations is expected to rise 1.7 percent to $3.8 trillion in 2025, despite geopolitical challenges, according to a regional provider of credit guarantees.

Growth in 2026 is forecast to climb to 5.6 percent, reaching $4 trillion, the UAE’s state-owned Wam news agency reported, citing the Arab Investment and Export Credit Guarantee Corporation (Dhaman).

The optimism is underpinned by a potential easing of regional conflicts, an improving economic outlook, structural reforms and increased merchandise and service exports.

Eight oil economies account for over 70 percent of Arab GDP.

The region’s average unemployment rate edged down to 9.4 percent in 2025, driven by declines in all regional countries. It is expected to fall further to 9.2 percent in 2026.

Average consumer-price inflation in the Arab region declined to 10.3 percent in 2025 and will fall further to 8 percent next year.

The estimated combined budget deficit of Arab nations rose 53 percent to $95 billion in 2025, accounting for 2.5 percent of Arab GDP, following a 13 percent drop in average global oil prices to $69 per barrel. The deficit is likely to fall marginally to $94.5 billion in 2026.

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Total investment in 14 Arab countries rose 5.2 percent to $864 billion in 2025, with expectations of a 5.4 percent increase to beat $910 billion in 2026.

Arab foreign-exchange reserves climbed 3.4 percent to $1.2 trillion, enough to cover Arab merchandise and service imports for about 5.6 months on average.

These reserves are projected to rise 2.5 percent next year, covering merchandise and service imports for 5.7 months, Dhaman said.