The Arab Investment and Export Credit Guarantee Corporation has reported that the Arab region’s GDP grew by 1.8% last year, reaching over $3.5 trillion. This growth comes despite ongoing wars and conflicts in the region, particularly the recent violent conflict in Gaza and other neighboring countries. While some economic indicators reflect positive progress, rising unemployment rates and job layoffs continue to pose significant challenges across Arab nations.

Key Arab countries such as Saudi Arabia, the UAE, Egypt, Iraq, and Algeria are driving this economic growth, collectively contributing more than 72% of the region’s total GDP. Looking forward, the Arab economy is anticipated to expand further, with a projected growth rate of 4.1% in 2025. This optimistic outlook is primarily fueled by 14 Arab countries, including nine oil-producing economies, which account for over 78% of the region’s GDP. Improved revenues from the oil and gas sectors and an increase in goods and services production are expected to support this growth, even as external pressures, such as those from former U.S. President Donald Trump’s policies, aim to challenge the region’s economic reliance on these industries.

The International Monetary Fund notes that Arab economic performance varied last year, largely impacted by a 4% decline in crude oil production and a 1% drop in global oil prices. Other significant factors include the escalating conflicts in Gaza, Lebanon, Yemen, Syria, and Iraq, along with ongoing issues in Sudan, climate change, and rising external debt. Despite these obstacles, per capita GDP across Arab nations improved by 1.2%, reaching $7,557 in 2024, with projections suggesting a further increase to $7,602 in 2025. Adjusted for purchasing power parity, per capita GDP rose by 2%, reaching about $19,000 in 2024. However, considerable economic disparities remain evident throughout the region.

The population of the Arab region grew by 2%, exceeding 467 million in 2024. Nonetheless, unemployment poses a pressing issue, with the average jobless rate standing at 9.7%, raising concerns about future economic stability. Regarding debt, Arab states are increasingly seeking external loans to meet financial obligations. In 2024, government debt as a percentage of GDP decreased to 48.3%, with predictions of a further drop to 47.6% by the end of 2025. However, external debt rose to approximately 56% of Arab GDP in 2024, with a slight decline expected to 54.5% in 2025.

Additionally, Arab nations are taking steps to lower inflation rates, utilizing budget surpluses, increasing foreign trade value, and building foreign currency reserves. These initiatives aim to enhance economic resilience and ensure the region can sustain imports of goods and services for the foreseeable future.