The International Monetary Fund (IMF) has significantly revised its 2026 growth forecast for the Middle East and North Africa, now projecting a mere 1.1 percent growth. This adjustment is attributed to severe disruptions in oil and gas exports resulting from ongoing conflicts in the region. In its latest World Economic Outlook, the IMF highlighted that countries such as Iran, Iraq, and Qatar are expected to be among the most adversely affected, marking a sharp decline from its earlier January prediction of 3.9 percent regional growth for the year.
The prolonged conflict has inflicted substantial damage on production facilities and has effectively closed the Strait of Hormuz, a critical maritime chokepoint through which a significant portion of the Gulf’s energy resources is transported to global markets. Consequently, Iran’s economy is anticipated to contract by 6.1 percent this year, a downward revision of 7.2 percentage points from previous forecasts. Similarly, Qatar is projected to experience an 8.6 percent contraction due to damage sustained at its primary liquefied natural gas production site, while Iraq’s economy is expected to shrink by 6.8 percent. The IMF stated, “For commodity exporters directly affected by the conflict, diminished production and exports imply a severe downward revision of GDP growth projections for 2026.”
The extent of the economic damage will depend on the severity of infrastructure losses and the ability to utilize alternative export routes. Economies most impacted include Bahrain, Iran, Iraq, Kuwait, and Qatar, while Oman, Saudi Arabia, and the United Arab Emirates are expected to experience less significant effects. Bahrain and Kuwait, both heavily reliant on the Strait of Hormuz and targeted by the conflict, are projected to contract by 0.5 and 0.6 percent, respectively, a stark contrast to their growth rates above 3 percent last year. In contrast, Saudi Arabia, the region’s largest economy and the world’s leading oil exporter, is forecasted to grow by 3.1 percent, a decrease of 1.4 percentage points, partly due to a pipeline that bypasses Hormuz. The UAE, which also benefits from alternative export infrastructure, is expected to grow by 3.1 percent, down from 5.8 percent in 2025.
The IMF noted that growth across the region could rebound in 2027, assuming that energy production and transportation normalize within the next few months. However, it cautioned that this optimistic outlook could be jeopardized if the conflict persists or if damage assessments worsen. Energy-importing countries are also feeling the repercussions, with rising commodity prices leading to lowered growth forecasts for nations such as Egypt, where the outlook has been reduced by 0.5 percentage points to 4.2 percent. This report underscores how regional instability is reverberating through the global economy, with energy supply disruptions and infrastructure damage significantly impacting growth prospects throughout the Middle East and North Africa.
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