The Socceroos' bid to defend their title was handed a blow as Anas Bani Yaseen's first-half header caused an upset in Group B.
Arnold had forecast a win for Australia in his news conference ahead of the game, but his side will now need to bounce back against Palestine in its next outing.
However, Arnold - who is in his second spell in charge of the national team – insists his pre-match comments were not a sign of arrogance.
"That's a translation difference. It's not arrogance, it's belief," he said. "It's not arrogance at all. Those words are used a lot in Australia and in Australia it's not considered arrogant."
Australia dominated much of the game at Hazza Bin Zayed Stadium, but lacked a cutting edge up front.
Without the goals of the retired Tim Cahill to call on, captain Mark Milligan has highlighted the need for a more patient and clinical approach.
"We can be a little bit more patient but sometimes it's hard to maintain your patience when a team is sitting in so deep and giving you that ball to play," he told Fox Sports. "We need to settle down and keep our composure. The good thing is we kept going until the end. We'll work on things and we'll be alright.
"We know we have to be better if we want to progress and succeed in this tournament. I still think there are good signs in the way we want to play but we need to execute better."
Jordan put in a disciplined defensive display, but also troubled Mat Ryan on several occasions. Coach Vital Borkelmans believes Australia was complacent in its approach, pointing to Arnold's comments as evidence.
"It's very, very dangerous to talk like this," Borkelmans said. "I said many times to my players, guys, nobody knows. You saw it at the World Cup, big teams lost to small countries."