Abu dhabi: The Arab Investment and Export Credit Guarantee Corporation (Dhaman) has announced that the Arab gross domestic product (GDP) is expected to rise to approximately $4 trillion by 2026.
According to Emirates News Agency, this projection follows a 1.7 percent increase in GDP value to about $3.8 trillion in 2025, despite ongoing regional geopolitical challenges. The economic growth remains largely concentrated in Saudi Arabia, UAE, Egypt, Algeria, and Iraq, which together account for nearly 73 percent of the region’s total GDP.
In its fourth quarterly bulletin ‘Dhaman Al-Istithmar’ for 2025, Dhaman highlighted generally positive economic performance forecasts for 2026, with an anticipated 5.6 percent increase in GDP value. This growth is expected to be driven by potential GDP increases in 19 Arab countries, including eight oil economies that contribute over 70 percent of the Arab GDP. The predictions come amidst cautious optimism about easing regional unrest and conflicts, improving economic conditions, and rising benefits from structural reforms and exports.
The Corporation also noted that IMF forecasts indicate mixed economic performance indicators for 2025 due to declining global oil prices and continued geopolitical risks. The Arab GDP, measured by purchasing power parity, surged by 6.1 percent to over $9.8 trillion and is expected to exceed $10 trillion in 2026.
Despite these positive projections, the GDP per capita in Arab countries saw a slight decline of 0.3 percent to $7,806 in 2025. In contrast, purchasing power parity showed a 4 percent increase, surpassing $20,000, reflecting the disparity between oil-producing and lower-income countries.
The region’s unemployment rate decreased to 9.4 percent in 2025, with forecasts predicting a further decline to 9.2 percent in 2026. Additionally, inflation rates dropped in 16 Arab countries during 2025, reducing the average consumer price inflation rate to around 10.3 percent, with expectations of it falling further to 8.1 percent in 2026.
The average annual exchange rate of seven Arab currencies improved against the US dollar in 2025, while currencies from six countries remained stable and seven others declined. The combined virtual deficit of Arab budgets increased by 53 percent to approximately $95 billion in 2025, impacted by a 13 percent drop in global oil prices. This deficit is projected to slightly decrease to $94.5 billion in 2026.
Total investments in 14 Arab countries rose by 5.2 percent to $864 billion in 2025, making up 27.3 percent of GDP. These investments are expected to grow by 5.4 percent to over $910 billion in 2026.
Debt indicators showed a slight deterioration, with the government debt-to-GDP ratio rising to 46.2 percent in 2025 and expected to exceed 47 percent in 2026. The external debt ratio also increased to 54.6 percent of GDP in 2025, with a slight rise anticipated in 2026.
The Arab current account surplus decreased by 47 percent to $63 billion in 2025, representing 1.7 percent of GDP, and is expected to decline further to $41.5 billion or 1 percent of GDP in 2026. However, foreign exchange reserves grew by 3.4 percent to approximately $1.2 trillion in 2025, covering about 5.6 months of imports, with a projected rise of 2.5 percent in 2026, extending coverage to 5.7 months.