Business
IMF forecasts 1.3 percent regional economic contraction in 2026
However, it said the region’s economies could recover in 2027 if the conflict eases in early 2027 and regional trade gradually returns to normal.
The International Monetary Fund (IMF) has projected a 1.3 percent economic contraction across the Middle East, North Africa, Afghanistan and Pakistan in 2026, citing the economic impact of the U.S.-Israeli conflict with Iran.
In its Regional Economic Outlook report released Thursday in Dubai, the United Arab Emirates, the IMF revised its forecast downward by about three percentage points compared with its April projection.
The fund said disruptions to energy production, shipping, trade and tourism caused by the conflict are expected to weigh on regional economic activity.
According to the report, all Gulf Cooperation Council member states, except Oman, are projected to experience economic contractions this year. Bahrain, Kuwait and Qatar are expected to record double-digit declines in economic output.
The IMF warned that the regional economic outlook remains highly uncertain. However, it said the region’s economies could recover in 2027 if the conflict eases in early 2027 and regional trade gradually returns to normal.