I think that you can argue that the literature produced by the Ottomans itself is part of Arabic literature, in which case you can argue that the state of Arabic literature wasnt so bad.

Im referring to the great works of literature produced in Istanbul/Constantinople, not the ones produced by Arabians in the Arabia region occupied by the Ottomans. These can be considered as part of Arabic literature because the Ottoman language was very similar to Arabic and Farsi languages and the language used in this literature was particularly closer to Arabic and Farsi since the nobles of Istanbul wanted to separate their literature from that of the common folk by using more and more Arabic and Farsi in their writing.