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The International Monetary Fund (IMF) projected on Thursday a sharp economic contraction of 1.3 percent across the Middle East, North Africa, and Pakistan this year, driven by the ongoing conflict initiated by the United States and Israel against Iran. The contraction is projected to be followed by a robust recovery, with regional growth rebounding to 6.6 percent in 2027, though the Fund cautioned that any further disruptions to energy production could downgrade the outlook.
In a report released on Thursday in Dubai, the IMF stated that the conflict's toll has severely impacted regional output through disruptions in energy production, maritime shipping, tourism, trade, and investor confidence. While economic output is expected to surge significantly in 2027, overall economic levels across these markets will remain below pre-war baseline projections.
The IMF noted that the economic fallout has been substantial but unevenly distributed. Oil-exporting nations bore the most direct brunt of energy and shipping disruptions, whereas regional oil-importers demonstrated greater relative economic resilience.
The Fund stressed that its baseline outlook assumes the conflict will subside in early 2027 with trade gradually returning to normalcy throughout the year, but emphasized that forecasts remain subject to "exceptionally high uncertainty."
Additionally, the IMF reported that economic growth in the Caucasus and Central Asia is heading toward a more sustainable trajectory, projecting economic output growth of 5.2 percent in 2026 and 5.0 percent in 2027.
(Reuters)