The International Monetary Fund (IMF) stated that the ongoing conflict in the Middle East is dealing an "unprecedented" blow to the region's economies. In its latest regional economic outlook report, the IMF forecasts that five of the eight Gulf Cooperation Council (GCC) oil- and gas-producing countries will experience an economic contraction in 2026.
The countries facing contraction are Bahrain, Kuwait, Qatar, Iraq, and Iran. The IMF attributes this downturn primarily to the economic fallout from the regional war, which has disrupted trade, increased uncertainty, and impacted investor confidence. The conflict's effects are compounding existing fiscal pressures in some nations.
Growth in the remaining three GCC economies—Saudi Arabia, the United Arab Emirates, and Oman—is projected to slow significantly but remain in positive territory. The IMF's analysis suggests the war's impact is creating a stark divergence in economic fortunes within the region, with hydrocarbon-dependent economies being particularly vulnerable to the instability.
The fund warned that the conflict poses severe risks to the medium-term outlook for the Middle East and North Africa, potentially setting back development goals. It called for increased international cooperation to address the humanitarian crisis and support economic stability in affected nations.
