IMF Forecasts 1.3% Contraction for Middle East Economies in 2026

The IMF forecasts that economies across the Middle East, North Africa, Afghanistan and Pakistan will contract by 1.3% in 2026 as conflict disrupts energy production, shipping, tourism, trade and confidence, then rebound to 6.6% growth in 2027 if hostilities ease and trade normalizes. The recovery is expected to be uneven, with oil exporters more exposed to production and shipping disruptions and oil-importing economies showing greater resilience, aided by domestic demand, remittances, tourism and policy measures. The Fund warns that further disruption could push energy prices higher, while tighter financial conditions and exceptionally high uncertainty pose additional risks; regional output may also remain below pre-conflict projections. Separately, the IMF projects Saudi Arabia’s growth at 7.9% in 2027 and 3.6% in 2031, while the Saudi Finance Ministry expects 12.8% growth in 2027.