The Arab region’s economy is expected to reach $4 trillion in 2026, expanding 5.6% from the previous year, according to new projections from the Arab Investment and Export Credit Guarantee Corp. (Dhaman). The report, cited by WAM, shows regional GDP grew 1.7% in 2025 to nearly $3.8 trillion, despite geopolitical tensions and uneven global conditions.
Economic activity remains concentrated, with Saudi Arabia, the UAE, Egypt, Algeria, and Iraq contributing 73% of total output. Dhaman noted “guarded optimism” that regional instability may ease and structural reforms will support stronger economic fundamentals.
Under purchasing power parity, GDP rose 6.1% to surpass $9.8 trillion in 2025 and is projected to exceed $10 trillion in 2026. However, GDP per capita slipped 0.3% to $7,806, highlighting persistent income gaps between oil-rich and lower-income economies.
Unemployment across the region slightly improved to 9.4% in 2025, with an expected decline to 9.2% next year. Inflation also cooled, dropping to 10.3% in 2025 and forecast to ease further to 8.1% in 2026.
Fiscal pressures intensified as the region’s combined budget deficit climbed 53% to $95 billion, driven by a 13% fall in global oil prices. Debt ratios also increased, with government debt expected to exceed 47% of GDP in 2026.Despite challenges, total investments in 14 Arab countries rose 5.2% to $864 billion, while foreign reserves increased to $1.2 trillion, covering 5.6 months of imports.
