AMMAN — Arab economies entered 2026 burdened by long-standing structural weaknesses, including slow growth, persistent unemployment, widening social inequality and a limited capacity to absorb external shocks. These challenges became more pronounced over the past year as a series of global and regional developments unfolded simultaneously, as revealed by economists.

 

In 2025, several key factors shaped the economic landscape. Oil prices declined, global interest rates remained high, and trade tensions, escalated earlier under the US administration, continued to weigh on global demand.

 

“At the same time, wars and conflicts expanded across several regions, technological change accelerated, particularly in artificial intelligence, and the global shift towards renewable energy intensified in response to climate pressures,” economist Ahmad Awad told The Jordan Times.

 

“These developments created a complex and uncertain backdrop for Arab economies,” he added.

 

"The impact of these variables varied sharply across countries, highlighting that the Arab world is far from a unified economic bloc. Economies can broadly be divided into oil-exporting states, middle- and low-income countries, and nations experiencing occupation or armed conflict, " Awad said.

 

"While some countries maintained relative financial stability, others saw rapid deterioration in key indicators, with several facing growing risks to economic and social stability."

 

Oil-exporting countries were most directly affected by the drop in crude prices, which fell to around $60 per barrel in 2025, with pressure expected to persist into 2026.

 

From Jordan’s perspective, these shifts carry particular significance. Economist Lina Karim noted that “lower oil prices indirectly affect Jordan through reduced regional growth, weaker investment flows, and slower labour demand in neighbouring markets.” She added that Jordan faces the dual challenge of navigating external shocks while managing internal pressures, including high public debt and youth unemployment.

 

Addressing recent developments in Venezuela, Karim said, “Broader instability often translates into tighter financing conditions and higher risk premiums. Developments in Venezuela, including political unrest and interruptions to crude exports, have added to fluctuations in global energy markets.”

 

She emphasised that “Although global oil supply remains ample, concerns over Venezuelan production contribute to price uncertainty, alongside continued oversupply and subdued demand.”

 

Such volatility is particularly critical for Arab oil-exporting countries, whose economic outlooks remain closely tied to global crude price expectations, she concluded.

 

As 2026 unfolds, international institutions warn that easing inflation alone will not resolve the underlying vulnerabilities facing Arab economies. For Jordan and the wider region, the period ahead will demand a careful balance between maintaining short-term stability and implementing long-term reforms to reduce exposure to external shocks and build more sustainable economic foundations.