IMF sees Middle East growth slowing sharply at 1.9% in 2026 on conflict impact

Economic growth across the Middle East and Central Asia is expected to slow sharply in 2026 before rebounding in 2027, as regional conflict disrupts energy production, transport routes, and trade flows, the International Monetary Fund (IMF) said on Tuesday.

According to its latest World Economic Outlook, the IMF projected regional growth at 1.9 per cent in 2026, down from 3.6 per cent in 2025, before recovering to 4.6 per cent in 2027, saying the region would bear the most direct impact of the conflict.

It said the downturn is driven mainly by disruptions to energy output and transportation infrastructure, with commodity exporters particularly affected by damage risks and reliance on key shipping routes such as the Strait of Hormuz.

The Fund said the scale of the slowdown varies across countries depending on exposure to energy infrastructure disruption and the availability of alternative export routes.

Bahrain, Iran, Iraq, Kuwait, and Qatar are expected to be the hardest hit, while Oman, Saudi Arabia, and the United Arab Emirates will have less significant impact, the IMF added.

Across the region, growth is expected to recover in 2027 on the assumption that energy production and transport networks normalise. However, the Fund warned that risks remain tilted to the downside if disruptions persist or expand.

“For all these economies, growth in 2027 is expected to rebound, based on the assumption that energy production and transportation are normalised over the next few months—an assumption that may need to be revised if the duration of the conflict extends and the degree of damage suffered gets reassessed.”

Attribution: Amwal Al Ghad English