Middle East and Central Asia’s economy to shrink in 2026 amid war, IMF says — SkimNews
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- Middle East and Central Asia economy is forecast to contract 0.3% in 2026, a sharp downgrade from the 1.9% expansion projected in April, making it the only region expected to see negative growth.
- Kuwait, Iraq, and Qatar face the steepest contractions, with GDPs forecast to shrink by 16.7%, 16%, and 15.6% respectively, per the IMF outlook.
- Bahrain's GDP is forecast to contract 11.3% while Iran's economy is projected to shrink 7.6%.
- Saudi Arabia is estimated to record negative growth of 3.3%, partially offset by boosting oil exports through the East-West pipeline.
- The IMF attributed the downgrade to prolonged disruption in the Strait of Hormuz, which carries one-fifth of global oil supplies in peacetime.
- Kyrgyzstan is projected to have the strongest growth in the region at 9%, bucking the broader regional trend.
- The IMF raised its global GDP forecast to 3.1% (up from 3%) but warned that further conflict escalation, AI reassessment, trade tensions, and fiscal vulnerabilities could weaken growth.
Why it matters: Gulf oil-dependent economies — Kuwait, Iraq, Qatar, Bahrain — face double-digit GDP collapses because Hormuz shipping disruptions choke the revenue they depend on, with Saudi Arabia still in the red despite pipeline offsets. The IMF's own data shows this is the only shrinking region globally even as world growth ticks up to 3.1%.
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