IMF Forecasts 1.3% Contraction for Middle East Economies in 2026

On Thursday in Dubai, the IMF released its regional economic outlook and forecast a 1.3% contraction in 2026 for Middle East, North Africa, Afghanistan and Pakistan economies. Jihad Azour told reporters several Gulf oil exporters are projected to experience recession this year. The Fund slashed its Gulf 2026 growth forecast by 6.8 percentage points from a 2% expansion in April to a 4.8% contraction, with a 9.1% rebound projected for 2027 if hostilities ease. Bahrain, Kuwait, Qatar and Iraq are forecast to post double-digit GDP declines. Saudi Arabia and the UAE are now projected to experience recession; Oman is the GCC exception. Gulf non-oil output is forecast to contract 0.8% then grow 4.5% in 2027. Azour said a more prolonged conflict remains the principal risk to the outlook. The Fund cited exceptionally high uncertainty. The US State Department ordered departure of diplomats' families from Saudi Arabia missions. No major dispute identified in the reporting. Regional growth is projected at 6.6% in 2027 if trade normalizes.