IMF projects 0.3% contraction for Middle East in 2026

The International Monetary Fund projects that the Middle East and Central Asia economy will contract by 0.3% in 2026, reversing its previous forecast of 1.9% growth, as disruption to shipping and energy flows weighs on the region. The forecast appears in the IMF’s October World Economic Outlook. The Fund attributed the downgrade to a longer closure of the Strait of Hormuz than assumed in its April outlook. The waterway is a major route for energy shipments, and its disruption has affected regional trade and economic activity. The outlook varies sharply by country. The IMF projects that Iran’s economy will shrink by 7.6% in 2026. It forecasts contractions of 16% in Iraq, 16.7% in Kuwait and 15.6% in Qatar. Saudi Arabia is projected to contract by 3.3%. Oman is forecast to grow by 2.4% this year. The IMF cited the country’s access to export routes outside the Strait of Hormuz as one factor supporting its relative resilience. The Fund also projects the United Arab Emirates economy will contract by 3.9% in 2026. The IMF’s regional outlook marks a reversal from its April projection, which anticipated 1.9% growth. It forecasts a 6.