Arab GDP grows by 1.8% in 2024, forecast to reach 4.1% in 2025 — Dhaman

AMMAN — The Kuwait-based Arab Investment and Export Credit Guarantee Corporation (Dhaman) reported that the pan-Arab GDP grew by 1.8 per cent in 2024, surpassing $3.5 trillion despite regional challenges.

Dhaman highlighted that economic activity remained concentrated in Saudi Arabia, the United Arab Emirates, Egypt, Iraq, and Algeria, which together accounted for more than 72 per cent of the region’s total GDP, the Jordan News Agency, Petra, reported. 

The corporation projected a positive outlook for the Arab economy in 2025, forecasting a 4.1 per cent growth rate. 

This expansion is expected to be driven by 14 Arab economies, including nine oil-producing countries that collectively contribute over 78 per cent of Arab GDP. 

The forecast is based on "cautious" optimism regarding a potential easing of regional instability and improved revenues from oil, gas, goods, and services.

Citing International Monetary Fund estimates, Dhaman noted that Arab economic indicators diverged in 2024 due to a 4 per cent decline in crude oil production and a 1 per cent drop in global oil prices. 

Additional factors included the expansion of the war on Gaza into Lebanon, Yemen, Syria, and Iraq, the ongoing armed conflict in Sudan, climate change, and rising external debt.

According to data published in the fourth quarterly bulletin of 2024 (Investment Guarantee), per capita GDP in the Arab region increased by 1.2 per cent to $7,557, with a projected rise to $7,602 in 2025. 

Based on purchasing power parity, per capita GDP grew by 2 per cent to some $19,000, though significant disparities remain among Arab countries.

The Arab population grew by 2 per cent in 2024, exceeding 467 million people, while the region’s unemployment rate climbed to 9.7 per cent.

Meanwhile, consumer price inflation reached 12 per cent last year, with expectations of a decline to 8.5 per cent in 2025.

Fiscal deficits deepened, with the Arab budget surplus of $15 billion in 2023 turning into a $58 billion deficit in 2024. The deficit is projected to widen further to $68 billion this year, equating to about 2 per cent of GDP.

Arab debt indicators shifted in 2024, as the government debt-to-GDP ratio declined to 48.3 per cent, with expectations of a further decrease to 47.6 per cent by the end of 2025. 

The external debt ratio increased to nearly 56 per cent of GDP, with a forecast decline to 54.5 per cent this year.

Arab foreign trade in goods and services expanded by 3.6 per cent in 2024, exceeding $3.3 trillion, Dhaman said.  

Exports rose by 1 per cent, while imports grew by more than 7 per cent, leading to a 33 per cent reduction in the region’s trade surplus, which stood at $177 billion.

The Arab current account surplus shrank by 51 per cent to $89 billion in 2024, representing 2.5 per cent of GDP. This figure is expected to drop further to $47 billion in 2025, reducing its share of GDP to 1.3 per cent.

Arab foreign exchange reserves increased by 3.7 per cent to almost $1.2 trillion, providing coverage for more than eight months of imports, the corporation added, noting that this coverage is expected to slightly decline in 2025 despite a projected 1.2 per cent increase in total reserves.

Established in 1974 and headquartered in Kuwait, Dhaman is a multilateral institution comprising all Arab countries and four joint Arab financial institutions. 

It provides insurance services against credit and political risks to facilitate foreign direct investment in Arab economies and support regional trade.