The International Monetary Fund’s Director for the Middle East and Central Asia, Jihad Azour, warned on Thursday that a prolonged war in the Middle East poses the greatest risk to the region’s economies, amid disruptions affecting energy production, shipping routes and critical infrastructure.
Azour said the conflict was creating an uneven economic shock and placing countries directly affected by the war under severe pressure.
Speaking at a press conference on the sidelines of the annual meetings of the IMF and World Bank in Bangkok, Azour said the economic outlook would depend primarily on how quickly energy production and trade return to normal, as well as countries’ ability to maintain macroeconomic stability.
He explained that spare oil supplies available before the war, the use of alternative routes, adjustments in demand and withdrawals from stockpiles had helped contain the impact of the US-Israeli attacks on Iran and the subsequent closure of the Strait of Hormuz by Tehran.
However, Azour warned that these resources were limited, noting that declining inventories and reduced spare production capacity could lead to larger price adjustments if disruptions resume.
The IMF expects the economies of the Middle East, North Africa and Pakistan to contract by 1.3% in 2026, compared with growth of 3.3% in 2025, followed by a strong but uneven recovery in 2027, with growth projected at 6.6%.
Azour said oil-exporting countries directly affected by the war would experience a sharp contraction in 2026, followed by a strong rebound the following year as energy production returns to normal levels. However, output would remain below the medium-term projections made before the war.
He added that oil-importing economies in the region had demonstrated resilience and were expected to maintain it.
In the Caucasus and Central Asia, Azour said economies had weathered the shock relatively well, with inflation expected to continue easing from elevated levels. Growth is projected to slow to 5.2% in 2026 and 5% in 2027, compared with 6.2% in 2025.
Azour called on policymakers to prioritize price stability, rebuild fiscal buffers, tighten monetary policies, pursue prudent fiscal policies and strengthen the ability of economies to withstand future shocks.
Source: Reuters
