IMF Cuts 2026 Middle East GDP Forecast Amid War Fallout

The economy of the Middle East and Central Asia is set to shrink in 2026 amid the fallout of the conflict involving the United States, Israel, and Iran, with the International Monetary Fund (IMF) cutting its regional growth outlook. In its economic outlook released on Tuesday, October 13, 2026, the IMF forecast regional gross domestic product (GDP) to contract by 0.3 percent this year, marking a sharp downgrade from the 1.9 percent expansion projected in April.

### Money Play Traders tracking macro headwinds and global energy corridors should evaluate broader risk exposure as shipping disruptions persist in the Strait of Hormuz.

### IMF Growth Projections and Regional Impact The IMF cited prolonged disruptions to shipping in the Strait of Hormuz—a crucial conduit for one-fifth of global oil supplies—as the primary driver for the downgraded outlook. Kuwait, Iraq, and Qatar face severe contractions, with GDP expected to shrink by 16.7 percent, 16 percent, and 15.6 percent, respectively. Bahrain's economy is forecast to contract by 11.3 percent, while Iran's GDP is projected to decline by 7.6 percent.

Saudi Arabia, which has partially offset the energy sector hit through the East-West pipeline, is projected to record negative growth of 3.3 percent. Kyrgyzstan stands out as an exception, with GDP expected to expand by 9 percent. Globally, the IMF projects worldwide GDP growth at 3.1 percent, while warning of risks including conflict escalation, artificial intelligence reassessments, and renewed trade tensions.