The International Monetary Fund sharply reduced its 2026 growth forecast for the Middle East and North Africa (Mena) to 1.1% on Tuesday as war chokes Gulf oil and gas exports.
Iran and Iraq will be particularly hard-hit, the IMF’s World Economic Outlook warned, as it revised down its January prediction of 3.9 % regional growth this year.
Growth should rebound next year, as long as energy production and transport are “normalised” over the next few months, the IMF predicted. The region’s economies grew 3.2% in 2025, it said.
The weeks-long war has hammered production facilities and all but closed the Strait of Hormuz — the gateway for the Gulf’s abundant energy resources to the rest of the world.
Gross domestic product in Iran, hit by intense US-Israeli bombing, will contract 6.1% this year, the IMF said, slashing its January forecast by 7.2 percentage points.
In Qatar, whose main liquefied natural gas production site is badly damaged, GDP is expected to shrink 8.6%.
Iraq’s economy will contract 6.8%, the IMF said.
“For commodity exporters directly affected by the conflict, diminished production and exports imply a severe downward revision of GDP growth projections for 2026,” the report said.
The scale of the impact depends “on the degree of damage suffered in energy and transportation infrastructure as well as the dependence on the Strait of Hormuz and availability of alternative export routes,” it added.
Economic damage “is therefore more pronounced for Bahrain, Iran, Iraq, Kuwait, and Qatar and less significant for Oman, Saudi Arabia, and the United Arab Emirates”.
Bahrain and Kuwait, both heavily targeted by Iran and dependent on Hormuz for exports, were tipped to shrink by 0.5% and 0.6% respectively, from growth of more than 3.0% last year.
Saudi Arabia, the region’s biggest economy and the world’s top oil exporter, whose pipeline to the Red Sea gives it an alternative export route, is expected to grow 3.1%, down 1.4 percentage points from January’s forecast.
The United Arab Emirates, which also has a pipeline bypassing the Strait of Hormuz, was projected to grow 3.1%, dropping from 5.8% last year.
“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,” the IMF said.
But this assumption “may need to be revised if the duration of the conflict extends and the degree of damage suffered gets reassessed”, it warned.
Importing countries are also suffering from higher prices for energy and other commodities, the IMF said, citing Egypt, whose growth forecast was cut 0.5 percentage points to 4.2 %.
The IMF cut its 2026 global growth projection on Tuesday, warning that the world economy could be “thrown off course” by war in the Middle East — as the conflict roils commodity markets and sparks higher prices.
The global economy is set to grow by 3.1% this year, said the International Monetary Fund in its World Economic Outlook report, released during its spring meetings in Washington.
This is down from 3.3% forecast in January before hostilities erupted as US-Israeli strikes against Iran starting on February 28 prompted Tehran’s retaliation and sparked a broader conflict in the region.
“We were planning to upgrade growth for 2026 to 3.4%” if not for the war, IMF chief economist Pierre-Olivier Gourinchas told AFP.
Prices of oil, gas and fertilizers have surged due to the conflict, as Iran virtually blocked traffic through the Strait of Hormuz, a key waterway for shipments. US President Donald Trump has also ordered a naval blockade around Iran’s ports.
The fund expects higher inflation this year at 4.4%, 0.6 percentage points above its January forecast.
