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IMF forecasts 1.3% economic contraction in Middle East this year

The International Monetary Fund expects the Middle East, North Africa, Afghanistan and Pakistan economies to contract 1.3% in 2026, it said in its Regional Economic Outlook released in Dubai, citing the impact of the US-Israel-Iran conflict on energy production, shipping, trade and tourism. Jihad Azour, director of the IMF’s Middle East and Central Asia department, said all Gulf Cooperation Council members except Oman will see their economies shrink this year.

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AI take

The IMF's projection puts a hard number on a conflict that markets have mostly traded through energy headlines; the surprise is breadth, with nearly every GCC economy contracting rather than just the most exposed. The damage runs through shipping, trade and tourism as much as oil output, which matters for the region's diversification story. Whether Oman's outlier status reflects genuine insulation or timing is the open question, and how the IMF's next outlook revises these figures as the conflict evolves is worth watching.

Generated by AI for reference only.

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