The International Monetary Fund (IMF) on Tuesday significantly lowered its 2026 growth projection for the Middle East and North Africa (MENA) to 1.1 per cent, as ongoing conflict disrupts Gulf oil and gas exports.
According to the IMF’s World Economic Outlook, countries such as Iran, Iraq and Qatar are expected to be among the most severely affected, with the regional forecast revised down from 3.9 per cent estimated in January.
The Fund indicated that growth could recover in 2027, provided that energy production and transport systems are “normalised” within the coming months. It also noted that the region recorded 3.2 per cent growth in 2025.
The prolonged conflict has severely disrupted production facilities and nearly shut down the Strait of Hormuz, a vital route for exporting the Gulf’s energy resources globally.
The IMF stated that GDP in Iran, impacted by heavy US-Israeli airstrikes, is projected to contract by 6.1 per cent this year — a downward revision of 7.2 percentage points from earlier estimates.
In Qatar, where key liquefied natural gas infrastructure has sustained extensive damage, the economy is forecast to shrink by 8.6 per cent. Iraq’s GDP is also expected to decline by 6.8 per cent.
“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 stated.
It further explained that the extent of economic damage depends on the level of destruction to energy and transport infrastructure, as well as reliance on the Strait of Hormuz and the availability of alternative export routes.
The IMF observed that the economic fallout is more severe for Bahrain, Iran, Iraq, Kuwait and Qatar, while the impact is comparatively less for Oman, Saudi Arabia and the United Arab Emirates.
Bahrain and Kuwait, both heavily reliant on Hormuz and affected by attacks, are projected to record contractions of 0.5 and 0.6 per cent respectively, a sharp reversal from growth exceeding 3 per cent in the previous year.
Saudi Arabia, the region’s largest economy and the world’s leading oil exporter, is expected to grow by 3.1 per cent — 1.4 percentage points below January’s forecast — partly due to its alternative export route via the Red Sea.
Similarly, the United Arab Emirates, which also has infrastructure bypassing the Strait of Hormuz, is forecast to expand by 3.1 per cent, down from 5.8 per cent recorded last year.
The IMF reiterated that growth across the region is anticipated to recover in 2027, contingent on the restoration of energy production and transport systems. However, it cautioned that this outlook could change if the conflict persists or infrastructure damage proves more extensive than currently assessed.
Energy-importing countries are likewise feeling the strain from rising commodity prices. The IMF cited Egypt, whose growth forecast has been reduced by 0.5 percentage points to 4.2 per cent.