ECONOMIC growth in the Middle East and North Africa (Mena) will slow sharply this year as oil exporters struggle with the fallout of the Iran war, the International Monetary Fund (IMF) said.
In its latest World Economic Outlook, the IMF slashed the region’s 2026 real GDP growth forecast to 1.1pc, a 2.8 percentage point drop from its January projection.
While growth is expected to rebound to 4.8pc in 2027, the fund cautioned that this recovery assumes a normalisation of regional energy production and transportation within months - a projection subject to revision if the conflict persists.
“Mena countries are facing unprecedented challenges, exceptional uncertainty in their outlook,” IMF deputy managing director Bo Li said during a panel discussion in Washington. “Even if we see production and exports normalised by the middle of this year... their growth outlook is already severely impacted.”
Regional stability was upended in late February following US-Israeli strikes on Iran. Tehran responded with attacks on Gulf neighbours, damaging major energy facilities and disrupting the Strait of Hormuz, a chokepoint for roughly 20pc of global oil and liquefied natural gas (LNG) flows.
“For those countries most directly affected, their output will remain below their pre-war trends for the near term and also for the medium term,” Mr Li added.
The conflict has stoked global inflationary pressures and clouded the international outlook. Diplomatic efforts hit a wall over the weekend as US-Iran talks collapsed, followed by a US military blockade of Iranian ports, though back-channel dialogues reportedly continue.
The IMF noted that GDP revisions across the region were driven by diminished production and damaged infrastructure. The severity of the downgrades depends on a nation’s reliance on the Strait of Hormuz and the availability of alternative export routes.
Saudi Arabia, the world’s leading oil exporter, saw its 2026 growth forecast cut to 3.1pc, down 1.4 percentage points from January. However, the country is expected to fare better than its immediate neighbours due to its diversified infrastructure.
In contrast, Iran’s economy is forecast to contract by 6.1pc in the current fiscal year starting March 21, a sharp reversal from the 1.1pc expansion previously expected. The IMF projects a 3.2pc rebound next year.
Other Gulf economies, including Iraq, Kuwait, and Qatar, are now expected to see their economies contract this year.
Revisions were less severe for regional oil and gas importers. Egypt’s growth is projected to slow to 4.2pc in 2026, down from 4.7pc previously, with a forecast recovery to 4.8pc next year.
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