IMF warns Gulf economies face prolonged recovery from war

The International Monetary Fund (IMF) expects Middle Eastern economies to recover from the impact of the war, but does not anticipate a return to their pre-war growth trajectories in the medium term, the organisation’s regional director has said.

“We will not go back to the pre-war trajectory in the medium term because this shock will have a scarring impact on various sectors and also will disrupt a certain number of infrastructure and will require additional spending in order to increase resilience,” IMF regional director Jihad Azour told journalists, Al Jazeera reported.

The statement comes as the IMF forecasts economic contraction across Gulf economies following months of war that began with US-Israeli attacks on Iran and subsequently spread to Saudi Arabia and Yemen. Maritime energy traffic continues to be affected by the conflict.

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On Tuesday, the IMF released projections showing that the Middle East and Central Asia region, which is directly exposed to the war involving Iran, is expected to contract by 0.3% in 2026.

Saudi Arabia is among the economies expected to be hardest hit, with its economy projected to shrink by 3.3%.

News.Az