Prolonged war, renewed disruptions pose biggest risk to Middle East region, IMF says
TLT•The IMF said prolonged war and further disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to Middle East and Central Asian economies. It forecasts a 1.3% contraction in the Middle East, North Africa and Pakistan region in 2026, followed by 6.6% growth in 2027.
1. Regional economic risks
Jihad Azour, the IMF’s director for the Middle East and Central Asia, said the war was imposing a highly uneven economic shock, with directly affected states under severe pressure. The outlook depends on how quickly energy production and trade normalize and whether countries can preserve macroeconomic stability.
2. Growth forecasts
The IMF forecasts a 1.3% contraction in the Middle East, North Africa and Pakistan region in 2026, after 3.3% growth in 2025, followed by a strong but uneven rebound to 6.6% growth in 2027. Oil-exporting countries directly affected by the war are expected to contract significantly in 2026 and rebound sharply in 2027, but output is expected to remain below pre-war medium-term projections.
3. Buffers and policy
Pre-war surpluses, alternative routes, demand adjustments and inventory drawdowns helped contain the energy shock, but Azour said those buffers were finite, with lower inventories and tighter spare capacity. The IMF projects Caucasus and Central Asia growth to slow from 6.2% in 2025 to 5.2% in 2026 and 5% in 2027; Azour urged policymakers to prioritize price stability and rebuild fiscal buffers.
