The Arab region’s GDP grew by 1.8% in 2024, exceeding $3.5 trillion, despite the ongoing regional challenges.  The economic output of Saudi Arabia, the UAE, Egypt, Iraq, and Algeria continued to dominate, with these countries contributing more than 72% to the total Arab GDP.

According to a report by the Arab Investment & Export Credit Guarantee Corporation (Dhaman), the region is expected to see a positive economic performance, predicting a growth rate of 4.1%.

This anticipated growth is expected to be driven by stronger performance in 14 Arab countries, particularly the nine oil-dependent nations, which together make up over 78% of the Arab GDP.

While the region faces many challenges, the outlook is cautiously optimistic, with hopes for a reduction in political instability, improvement in oil and gas exports, and a rise in goods and services produced within the region.

However, the report highlighted several challenges faced by the Arab world’s economy in 2024.

A decline of roughly 4% in crude oil production, combined with a 1% decrease in global oil prices, had a negative impact on the region’s performance. Furthermore, the spillover effects of the conflict in Gaza were felt across neighboring countries, including Lebanon, Yemen, Syria, and Iraq.

The ongoing armed conflict in Sudan, climate change, and rising foreign debt also contributed to the region's economic difficulties.

The average per capita GDP in the Arab region rose by 1.2%, reaching $7,557 in 2024. This figure is expected to increase by 1% in 2025, reaching $7,602 per person.

The Arab population grew by 2% in 2024, surpassing 467 million people. At the same time, the region’s unemployment rate rose to an average of 9.7%.

Inflation across the Arab region increased to approximately 12% in 2024, but it is projected to decline to 8.5% in 2025, which would provide some relief.

The region’s combined budget surplus of $15 billion in 2023 turned into a deficit of $58 billion in 2024, representing a sharp reversal. This deficit is expected to widen further to $68 billion in 2025, making up around 2% of the region’s GDP.

Debt levels also showed mixed trends. The ratio of government debt to GDP decreased to 48.3% in 2024, with a further expected decrease to 47.6% by the end of 2025.

In contrast, the external debt ratio increased to about 56% of the GDP in 2024 but is anticipated to fall to 54.5% in 2025. These changes reflect ongoing challenges related to debt management in the region.

Arab foreign trade in goods and services grew by 3.6%, reaching over $3.3 trillion in 2024. Exports rose by about 1%, while imports grew at a much faster pace of 7%. This led to a 33% reduction in the trade balance surplus, which decreased to $177 billion in 2024. This shift in the trade balance reflects the growing import demand across the region.

The current account surplus of Arab countries dropped significantly by 51% to $89 billion in 2024, representing 2.5% of the Arab GDP. Projections indicate that this surplus will decrease further to $47 billion, or 1.3% of GDP, in 2025. This decline in the current account surplus is a concerning trend for the region’s economic stability.

Arab foreign exchange reserves saw a modest increase of 3.7%, reaching around $1.2 trillion in 2024. This amount is enough to cover more than eight months of imports for the region. In 2025, reserves are expected to grow slightly by 1.2%, although their coverage of total imports is likely to fall to less than eight months, highlighting a potential vulnerability in the region’s financial position.