IMF projects Middle East and Central Asia contraction as Hormuz disruption hits trade
The IMF has forecast that the Middle East and Central Asia economy will contract by 0.3% in 2026, reversing its earlier growth outlook as conflict-related disruption to energy production and shipping through the Strait of Hormuz weighs on activity. It projects contractions of 7.6% in Iran, 16% in Iraq, 16.7% in Kuwait and 15.6% in Qatar; Oman is forecast to grow 2.4%. The Fund expects 6.3% regional growth in 2027 if the strait reopens and trade flows recover, while warning that the outlook depends on the conflict and shipping disruption.
What changed The IMF has replaced its earlier expectation of regional growth in 2026 with a forecast contraction of 0.3%.
Why it matters Access to alternative export routes is cushioning Oman’s economy, illustrating why the shipping disruption is imposing uneven costs across Gulf producers.
What to watch next Whether Hormuz reopens and energy exports normalize remains unresolved; the projected 2027 rebound is conditional, not an assured recovery.
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