The International Monetary Fund warned on Thursday that a prolonged war in the Middle East, together with the possible renewal of disruption to energy production, shipping routes and critical infrastructure, poses the greatest risks to the economies of the Middle East and Central Asia, as the region’s countries have become less able to absorb new economic shocks.
Jihad Azour, the IMF’s director of the Middle East and Central Asia Department, said at a press conference on the sidelines of the annual meetings of the IMF and World Bank in Bangkok that the war had caused an uneven economic shock across the region, while countries directly affected were facing severe pressure.
Regional economy forecast to contract in 2026
The IMF expects the economies of the Middle East, North Africa and Pakistan to contract by 1.3% in 2026, after recording growth of 3.3% in 2025. The decline is expected to be followed by a strong recovery, but it will not be even across countries, with the region forecast to grow by 6.6% in 2027.
Azour said the outlook for these forecasts depended mainly on how quickly energy production and trade returned to normal, as well as on the ability of the countries concerned to maintain macroeconomic stability. He added that oil-exporting countries directly affected by the war would record a sharp contraction this year, before a strong recovery in 2027 as energy production returns to normal levels.
Despite the expected recovery, Azour said output would remain below the path the IMF had expected over the medium term before the war. The IMF’s estimates assume that normal trade and shipping will resume in the first quarter of 2027, with exports gradually returning to normal by mid-year, while oil prices remain high.
Azour warned that damage to infrastructure would require additional spending, while the economic shock would leave lasting effects across various sectors. By contrast, the economies of the region’s oil-importing countries have shown resilience that is expected to endure, reflecting differences in how the war’s effects are transmitted between energy-producing and energy-importing economies.
War’s impact varies between producers and importers
In the Caucasus and Central Asia, Azour said the economies had weathered the shock relatively well. The IMF expects growth in the region to slow to 5.2% this year and then to 5% in 2027, compared with growth of 6.2% in 2025, as inflation continues to decline from its elevated levels.
Pre-war surpluses, the use of alternative routes, demand adjustment and the substantial drawdown of inventories helped contain the energy shock caused by the attacks led by the United States and Israel against Iran, followed by Tehran’s closure of the Strait of Hormuz. Azour said these buffers had bought some time, but remained limited.
Depleted inventories raise risk of energy shocks
At the same time, supplies recovered during September, with crude exports from Gulf producers rising by 4.4 million barrels per day to reach 13.9 million barrels per day, a level exceeding 75% of pre-war exports.
Hormuz disruption hits Gulf revenues and supplies
However, the International Energy Agency warned that renewed attacks on energy facilities and tanker traffic threatened the continuation of this recovery. The World Bank said in its regional report issued this month that the war differed from previous energy shocks, which oil-exporting countries had usually benefited from.
It said the disruption of exports through the Strait of Hormuz had caused major losses to Gulf countries’ output and government revenues, despite higher oil prices. According to the bank, disruption to shipping increases import costs and adds pressure on supply chains and food prices, while the shock deepens existing vulnerabilities in fragile and conflict-affected economies.
Azour called on policymakers to prioritise price stability, rebuild fiscal buffers and strengthen their ability to withstand future shocks. The IMF expects the global economy to grow by 3.1% this year and 3.4% in 2027, with global inflation reaching 4.7% in 2026, driven largely by higher energy and food prices.
In its latest global forecasts, the IMF stressed that any support provided to affected households should be temporary and targeted at those most in need, while maintaining fiscal sustainability amid high debt and borrowing costs.
