The IMF has projected that real GDP growth in the Middle East and North Africa region will sharply decline to 1.1% this year. This reduction of 2.8 percentage points from the IMF’s January forecast is due to the impact of the war in Iran on oil-exporting countries. However, the IMF expects a rebound in growth, forecasting an increase to 4.8% by 2027.
However, the IMF said that it had assumed that energy production and transportation in the region would normalise over the next few months, and that this assumption may have to be revised if the conflict drags on.
“MENA countries are currently facing a high level of unprecedented challenges, a high level of exceptional uncertainty in the 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, the MENA economies, their growth, and their growth outlook are already severely impacted.
“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,” Bo added.
The war has also created inflationary pressures and clouded the global economic outlook. US-Iran talks to resolve the conflict broke down over the weekend, and the US military has begun a blockade of Iranian ports, though efforts to maintain dialogue continue.
Due to lower production and exports, the IMF revised GDP projections for countries in the region much lower. The degree of revision depends on “damage suffered in energy and transportation infrastructure as well as the reliance on the Strait of Hormuz and availability of alternative export routes,” it said.
Saudi Arabia, the largest economy in the Arab world and the world\’s largest exporter of oil, is now seen growing 3.1% in 2026, 1.4 percentage points less than in January, although it is expected to be less hard hit by the war than its Gulf neighbours.