Arab GDP value projected to hit $4 trillion in ’26: Dhaman

The Arab Investment & Export Credit Guarantee Corporation (Dhaman) revealed that the value of Arab gross domestic product (GDP) rose by 1.7 per cent to hit roughly $3.8 trillion in 2025 despite regional geopolitical challenges, with its geographical concentration continuing in Saudi Arabia, UAE, Egypt, Algeria and Iraq with a share of nearly 73 per cent of the region’s total.

In a press release on the occasion of the issuance of its fourth quarterly bulletin “Dhaman Al-Istithmar” for 2025, the Corporation explained that Arab economic performance forecasts were generally positive for 2026, with an expected rise of 5.6 per cent the value of Arab GDP to around $4 trillion, driven by a potential growth of the GDP in 19 Arab countries, including eight oil economies that contribute over 70 per cent of the Arab GDP. This comes amidst guarded optimism that the region’s unrest and conflicts are set to ease, the economic situation to improve, and benefits of structural reforms and merchandise and service exports to rise.

The Corporation said that IMF forecasts show that Arab economic performance indicators were generally mixed during 2025 due to declining global oil prices, continued geopolitical risks in the region and mounting economic and social risks.

The value of the Arab GDP, according to purchasing power parity, surged by 6.1 per cent to exceed $9.8 trillion, and is expected to keep rising to exceed $10 trillion in 2026.

A slight decline in the GDP per capita in Arab countries by 0.3 per cent down to $7,806 during 2025, compared to a 4 per cent hike, according to purchasing power parity, to exceed $20,000 amid the continued large disparity between oil-producing countries and lower-income ones.

The region’s average unemployment rate edged down to 9.4 per cent during 2025, driven by a drop in unemployment rates in all countries of the region amid forecasts that it will continue to fall to 9.2 per cent in 2026.

In conjunction with the fall in inflation rates in 16 Arab countries during 2025, the average consumer price inflation rate in the Arab region declined to around 10.3 per cent in 2025. It is likely to keep falling to reach 8.1 per cent in 2026.

The average annual exchange rate of 7 Arab currencies of Tunisia, Qatar, the UAE, Morocco, Algeria, Djibouti and Syria improved against the US dollar during 2025, while the currencies of six countries remained stable and seven other Arab currencies declined against the dollar during the same year.

The combined virtual deficit of Arab budgets shot up by 53 per cent to hit roughly $95 billion in 2025, making up 2.5 per cent of the Arab GDP, affected by a 13 per cent drop in the average global oil prices down to $69 per barrel during 2025. This deficit is likely to fall slightly to $94.5 billion in 2026.

Total investments’ value in 14 Arab countries went up by 5.2 per cent to reach around $864 billion in 2025, accounting for 27.3 per cent of the GDP of those countries amid expectations that these investments will rise by 5.4 per cent to exceed US$910 billion in 2026.

Arab performance dropped in view of debt indicators, as the ratio of government debt to GDP edged up to 46.2 per cent in 2025, and is expected to continue to exceed 47 per cent in 2026. The ratio of Arab external debt also shot up to about 54.6 per cent of Arab GDP during 2025, while it is expected to go up slightly to hit 54.7 per cent of Arab GDP in 2026.

The Arab current account surplus shot down by 47 per cent to $63 billion in 2025, representing 1.7 per cent of the Arab GDP. It is expected to nosedive to $41.5 billion, making up only 1 per cent of the Arab GDP in 2026.

Arab foreign exchange reserves rose by 3.4 per cent to roughly $1.2 trillion, which is enough to cover Arab merchandise and service imports for about 5.6 months as an annual average. These reserves are projected to rise by 2.5 per cent in 2026 and import coverage months will increase slightly to 5.7 months during the same year.

Separately, a report by the Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) indicated recently that the economies of the GCC countries recorded a balanced performance during 2024 despite global challenges, as the real GDP growth rate reached about 1.9%, driven by a 4.4% growth in non-oil sectors - reflecting progress in implementing economic transformation strategies.

The report also projected that the growth pace will accelerate in the coming years to reach 4.3% by 2027, supported by expanding investments in tourism, renewable energy, manufacturing, and technology sectors.

The GCC-Stat) report, “Economic Performance Outlook 2024 - Enabling fiscal sustainability and enhancing non-oil growth’’, provides a comprehensive analytical overview of the macroeconomic performance of the GCC countries during 2024, including indicators of economic growth, inflation, public finance, public debt, fiscal sustainability as well as developments in financial markets, monetary and banking policy, foreign direct investment, foreign trade, and the Gulf labor market.

Earlier data showed that real Gross Domestic Product (GDP) of the Gulf Cooperation Council (GCC) countries reached $466.2 billion by the end of the first quarter of 2025, up from $451.9 billion in the same period of 2023, marking a growth rate of 3.1 per cent.

WAM