Middle East, North Africa and Pakistan output forecast to shrink 1.3% in 2026

The International Monetary Fund forecasts a 1.3% contraction in 2026 output across the Middle East, North Africa and Pakistan, Reuters reports. The IMF attributes the decline to the Iran war’s effects on energy production, shipping, tourism, trade and confidence. It projects 6.6% growth in 2027, but output would generally remain below pre-war projections.

The effects are uneven. According to Reuters’ account of the IMF outlook, oil-exporting economies directly affected by energy-production and shipping disruptions have been hit harder, while oil importers have proved more resilient. The IMF expects Gulf Cooperation Council economies to contract in 2026, except Oman. It forecasts double-digit GDP declines for Bahrain, Kuwait and Qatar, as well as Iraq, which is not a GCC member.