Prolonged war, renewed disruptions pose biggest risk to Middle East region, IMF says
SPY•The IMF said prolonged war and renewed disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to Middle East and Central Asian economies. It forecast a 1.3% contraction in the Middle East, North Africa and Pakistan in 2026, followed by 6.6% growth in 2027.
1. War risks and buffers
Jihad Azour, the IMF’s director for the Middle East and Central Asia, said the war was imposing a highly uneven economic shock across the region. Pre-war surpluses, alternative routes, demand adjustments and inventory drawdowns had contained the energy shock, but he said those buffers were finite and renewed disruption could trigger larger price adjustments.
2. Regional growth outlook
The IMF forecast a 1.3% contraction in the Middle East, North Africa and Pakistan in 2026, after 3.3% growth in 2025, followed by 6.6% growth in 2027. Directly affected oil exporters were expected to contract significantly in 2026 and rebound sharply in 2027, though output would remain below pre-war medium-term projections. Growth in the Caucasus and Central Asia was projected to slow from 6.2% in 2025 to 5.2% in 2026 and 5% in 2027.
