The International Monetary Fund (IMF) on Thursday forecast a sharp contraction in economic output across the Middle East, North Africa and Pakistan this year due to the war launched by the United States and Israel against Iran, followed by a recovery and growth of 6.6% in 2027. The fund warned that any further disruption to energy production could lead to a deterioration in the outlook.
The IMF said regional output is expected to contract by 1.3% as the war affects energy production, shipping, tourism, trade and economic confidence. Economic output is expected to rebound strongly in 2027, although economies across the region will generally remain below pre-war projections.
In its report issued Thursday in Dubai, the IMF said the impact of the war has been significant but uneven. Oil-exporting economies have been more directly affected by disruptions to energy production and shipping, while oil-importing countries have demonstrated greater economic resilience.
The fund said its projections are based on the assumption that the conflict will subside in early 2027 and that trade will gradually return to normal during the year. However, it warned that the outlook remains highly uncertain due to what it described as “exceptionally high uncertainty.”
Meanwhile, the IMF said economic growth in the Caucasus and Central Asia is moving toward a more sustainable pace, forecasting output growth of 5.2% in 2026 and 5% in 2027.
Source: Reuters
