UN Report: Arab Region's GDP Projected to Grow by 3.7% in 2026

Beirut (ANTARA) - The Arab region’s economy is projected to grow faster in the next two years, with the average gross domestic product (GDP) expected to grow by 3.7 percent and 3.3 percent in 2026 and 2027, respectively.

This is according to a report released by the United Nations Economic and Social Commission for Western Asia (ESCWA) on Wednesday (February 25).

The regional inflation rate is expected to decrease from 8.2 percent in 2025 to 5.4 percent in 2027 due to falling oil prices and reduced supply chain disruptions, according to the report titled “Macroeconomic Outlook in the Arab Region.”

However, the region remains vulnerable to various shocks and uncertainties that weigh on growth prospects, including geopolitical instability, wars and conflicts, trade disruptions in the Red Sea, and global trade policy uncertainties.

The report further states that projected increases in oil and gas production, coupled with efforts to diversify economies beyond the hydrocarbon sector, are expected to drive growth in high-income countries in the region.

However, significant risks remain for these countries, including the impact of rising US tariffs and concerns about the potential for renewed war between Israel and Iran and its impact on countries in the region given their geographical proximity to Iran.

Meanwhile, middle-income countries in the Arab region continue to face significant “geopolitical and socio-economic” challenges, such as the ongoing “aggression” in Gaza.

In addition, the report also states that low-income countries in the region are struggling with socio-economic challenges that are “exacerbated by limited fiscal space, reduced aid, conflicts, and political divisions.”

ESCWA calls on governments to deepen diversification, strengthen public finances, invest in human capital and digital transformation, and align aid and investment with national priorities, especially in conflict-affected countries.