Arab Region’s Economy Sees Growth Amid Regional Challenges
The Arab region’s gross domestic product (GDP) has experienced a significant increase of 1.8 percent, reaching $3.6 trillion in 2024. This growth is particularly noteworthy given the regional challenges that the area has faced in recent years.
Key Drivers of Economic Growth
According to data released by the Arab Investment and Export Credit Guarantee Corporation or Dhaman, the growth was primarily concentrated in Saudi Arabia, the UAE, Egypt, Iraq, and Algeria. These five countries together accounted for over 72 percent of the region’s total GDP, as reported by the Kuwait News Agency. This trend aligns with Moody’s January forecast that oil production and major investment projects will drive a 0.8 percentage point increase in annual economic growth across the Middle East and North Africa in 2025.
Regional Challenges Overcome
Despite facing regional challenges, the Arab region has shown resilience in its economic growth. The data also indicated positive outlooks for the Arab economy’s performance in 2025, with an expected growth rate of 1.4 percent. This growth is likely to be driven by expansion in 14 Arab countries, including nine oil-producing economies that together contribute more than 78 percent of Arab GDP.
Oil and Gas Revenues on the Rise
There is cautious optimism surrounding the potential reduction in regional unrest and conflicts, along with an expected improvement in revenues from oil, gas, and exports of goods and services produced by the region. In January, Moody’s emphasized that the impact of large investments in 2025 will be most evident in Saudi Arabia, driven by significant government and sovereign wealth fund spending related to the Vision 2030 diversification program.
Stronger Growth Among Hydrocarbon Exporters
Moody’s also noted that the pick-up in the MENA economy will be primarily fueled by stronger growth among hydrocarbon exporters. This is a result of the partial unwinding of strategic oil production cuts under the OPEC+ agreement. According to Moody’s, real GDP growth for hydrocarbon-exporting nations is expected to rise to 3.5 percent in 2025, up from 1.9 percent in 2024.
Saudi Arabia at the Forefront
The boost in growth among hydrocarbon exporters will be driven by countries like Saudi Arabia, the UAE, Iraq, Kuwait, and Oman easing the oil production cuts implemented in 2023. This trend highlights the significant role that these countries play in driving economic growth within the Arab region.
Regional Economies on the Path to Recovery
There is a growing sense of optimism surrounding the potential for regional economies to recover from past challenges. With an expected growth rate of 1.4 percent, the Arab economy is poised for continued growth and development in 2025. This trend is likely to be driven by expansion in key sectors such as oil and gas production, exports, and government investment.
Looking Ahead to 2025
As we look ahead to 2025, there are several factors that will contribute to the Arab economy’s continued growth. These include:
- Expansion in 14 Arab countries
- Stronger growth among hydrocarbon exporters
- Improved revenues from oil and gas production
- Increased investment in key sectors
Conclusion
The Arab region’s economic growth is a testament to its resilience in the face of regional challenges. With an expected growth rate of 1.4 percent, the Arab economy is poised for continued growth and development in 2025. As we move forward, it will be essential to continue driving growth through expansion in key sectors, strengthening hydrocarbon production, and improving revenues from exports.
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