Middle East, North Africa and Pakistan GDP to contract 1.3% in 2026, IMF says

The IMF on Thursday forecast a sharp drop in economic output in the ‌Middle East, North Africa and Pakistan this year due to the Iran war, followed by 6.6% growth in 2027, though it warned that further energy production disruptions could worsen the outlook.

The International Monetary Fund said the region's output was expected to contract by 1.3% as a result of the war's ​impact on energy production, shipping, tourism, trade and confidence.

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Economic growth would increase sharply in 2027, but output in those economies ​would generally stay below pre-war projections.

The impact of the US-Israeli-led war against Iran had been substantial, ⁠but uneven, with oil-exporting economies directly affected by disruptions to energy production and shipping hit harder, and oil importers proving to ​be more resilient, the IMF said in its regional outlook released on Thursday in Dubai.

"This sharp downgrade is concentrated among the economies ​most directly affected by the conflict," Jihad Azour, the IMF's director for the Middle East and Central Asia, said at a press conference.

"Several Gulf oil exporters are projected to experience recession this year," he added.

OUTLOOK CLOUDED BY 'HIGH UNCERTAINTY'

According to the IMF regional outlook, Gulf Cooperation Council (GCC) economies are expected to ​contract in 2026, with Oman the exception. Bahrain, Kuwait, Qatar, along with non-GCC member Iraq, are forecast to post double-digit declines ​in gross domestic product.