Prolonged war in the Middle East and further disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to economies in the Middle East and Central Asia, the International Monetary Fund said on Thursday. Jihad Azour, the IMF's director for the Middle East and Central Asia, made the remarks at a news conference during the IMF and World Bank annual meetings in Bangkok, Reuters reported.
Azour said the IMF forecasts a contraction of 1.3% in the Middle East, North Africa and Pakistan (MENAP) region in 2026, after growth of 3.3% in 2025, followed by a strong but uneven rebound to 6.6% growth in 2027. "The outlook depends critically on how quickly energy production and trade normalize, and on countries' ability to preserve macroeconomic stability," he said.
According to Reuters, Azour said pre-war surpluses, alternative routes, demand adjustments and inventory drawdowns had helped contain the energy shock, but that these buffers were finite: inventories are lower, spare capacity is tighter, and renewed disruption could cause much larger price adjustments. Oil exporters directly affected by the war face a significant contraction in 2026, while the region's oil importers have been resilient and are expected to remain so. Growth in the Caucasus and Central Asia is projected to slow to 5.2% in 2026 and 5% in 2027 from 6.2% in 2025.
Al Jazeera reported that the IMF's World Economic Outlook, released on Tuesday, forecasts contractions of 16.7% in Kuwait, 16% in Iraq, 15.6% in Qatar, 11.3% in Bahrain, 7.6% in Iran and 3.3% in Saudi Arabia. The Middle East and Central Asia is the only region expected to see negative growth in 2026, while global growth is projected at 3.1%.
For Pakistan, Dawn reported that the same outlook projects growth of 3.5% and inflation of 9.9% for FY27, below the government's 4% target for the current year and the World Bank's 3.8% forecast last month. Azour urged policymakers to prioritise price stability, rebuild fiscal buffers and strengthen their capacity to withstand future shocks.