The United Nation’s Economic and Social Commission for Western Asia (ESCWA) published a report titled “Survey of Economic and Social Developments in the Arab Region 2023-2024” shedding light on the economic and social development across Arab nations during the past couple of years. The report mentioned that the Arab region is slowly recovering from the COVID-19 pandemic yet is facing numerous challenges that present risks to its economic prospects. More specifically, the report revealed that the economic outlook for the Arab region must take into consideration several risks, namely the ongoing war on Gaza and the accompanying aggression on Lebanon (that developed into a war in September 2024), in addition to attacks on Iraq, Syria, and Yemen, the civil war in Sudan and the trade disruptions in the Red Sea. The ESCWA noted, however, that these risks will be offset by the resumption in oil production in some countries, coupled with the increase in demand for gas, phosphate, and fertilizers from the region, in addition to an increase in the production of gold, steel, and cement in other countries, not to mention diversification efforts to move economies away from the high reliance on oil in an endeavor to promote growth in non-hydrocarbon sectors. In details, the ESCWA estimated real GDP growth in the Arab region at 2.5% in 2024 and projected growth rate to rebound in 2025 to attain 3.9% before dropping mildly to 3.7% in 2026. In the same vein, the ESCWA revealed that the robust GDP growth levels projected for the years 2025 and 2026 could be reached in the event middle-income and conflict-affected countries successfully end the conflicts affecting them and begin reconstruction and economic reforms. Furthermore, the report revealed that the inflation rate in the Arab region is expected to drop from 11.9% in 2024 to 8.1% in 2025 and 6.5% in 2026 due to stable oil prices, rising interest rates in some countries, and the persistence of fuel and food subsidies.

Concerning High-Income countries (HICs) in the Arab region, the report mentioned that the OPEC crude basket fluctuated in 2024, with the price per barrel rising from $80 in January 2024 to a high of $89 in April before dropping to $74 per barrel in September. In addition, the ESCWA commented that as OPEC+ members extended voluntary oil production cuts until September 2025, oil prices are expected to hover around $87 per barrel for the remainder of 2024 and 2025. The report noted that GDP growth rate in HICs is expected to rise from 3.0% in 2024 to 4.3% in 2025 before slowing to 3.8% in 2026 mainly owing to the stabilization of oil prices and the increasing investments in the non-hydrocarbon sectors. Furthermore, inflation in HICs is expected to be tamed over the observed period, ranging between 2.0% and 2.3%. From another perspective, the ESCWA report revealed that Middle-Income countries (MICs) in the Arab region are encountering several gargantuan obstacles, including socioeconomic challenges (Egypt, Lebanon, and Tunisia), the war on Lebanon, and the consequences of the war on Gaza (which affected Lebanon, Jordan, and Egypt). Accordingly, the average GDP growth rate for MICs is expected to grow from 2.8% in 2024 to 3.6% in 2025 and 3.7% in 2026 assuming that the ceasefire agreement in Lebanon holds in 2025. As for inflation, the report revealed that it has affected MIC countries, reaching 20.8% in 2024, noting that it is expected to attain 12.9% in 2025 and 9.8% in 2026. As for Low-Income countries (LICs) in the Arab region, the ESCWA stated that they continue to encounter socioeconomic challenges, noting that GDP growth in LICs is estimated at 4.4% in 2024 and is expected to attain 4.0% in 2025 and 4.2% in 2026 thanks to a growth in the extractive sector. Regarding inflation, the report mentioned that it is expected to stay moderate at 3.8% in 2024, 3.4% in 2025, and 3.2% in 2026. As far as Conflict-Affected countries (CACs) in the Arab region are concerned, the report mentioned that their outlook is bleak as CACs continue to face wars, political divides, and security challenges. The GDP of CACs is expected to contract by 0.1% in 2024 before registering growth rates of 3.0% in 2025 (4.6% assuming both the war on Gaza and the civil war in Sudan end) and 3.4% in 2026. Inflation on the other hand is projected to remain elevated over the concerned period, reaching 32.5% in 2024, 22.6% in 2025, and 17.6% in 2026.

On a local basis, the ESCWA report stated that by December 2024 the Israeli war on Lebanon killed more than 2,000 individuals and injured around 10,000, not to mention that it resulted in the displacement of over 1 million individuals. The ESCWA stated that the war on Lebanon had devastating effects on the agricultural sector, as 20% of farmlands are located in the crisis stricken South region. The ESCWA report projected Lebanon’s GDP growth to attain 1.4% in 2025 and 2.1% in 2026 under the scenario of an end to the Israeli aggression on the country with expectations of a drop in the inflation rate from 52.5% in 2024, to 10% in 2025 and 5% in 2026. From another standpoint, the report mentioned that exports are expected to increase by 4.1% per year on average between the years 2024 and 2026, while imports are expected to rise by an average of 5.7% per annum over the same period. The ESCWA report commented that the Lebanese government continues to finance social safety nets, yet government revenues continue to suffer from low tax and customs receipts. Accordingly, Lebanon’s fiscal deficit is expected to attain 12% of GDP in 2024 before dropping to 9.2% in 2025 and 7.4% in 2026 fueled by the expected improvement in the country’s economic, political, and security situation.