Mideast war inflicts an unprecedented economic shock, IMF says

The IMF says the Middle East war has created an unprecedented shock to regional economies, with five of eight Gulf oil- and gas-producing countries expected to contract this year; recovery projections hinge on how and when the conflict ends.

The International Monetary Fund has described the Middle East war as an unprecedented shock to regional economies and has published a regional report outlining its effects. The IMF estimates that five of the Gulf's eight oil- and gas-producing countries will face economic contraction this year. Saudi Arabia, the United Arab Emirates and Oman are forecast to continue growing but at slower rates. IMF officials said prospects for a rebound next year depend on how and when the conflict is resolved. Key findings: - The IMF's regional report projects that five of the Gulf's eight oil- and gas-producing countries will contract this year. - Saudi Arabia, the United Arab Emirates and Oman are expected to maintain positive but slower growth. - The IMF reports that attacks on energy infrastructure and the de facto closure of the Strait of Hormuz have sharply reduced Gulf exports. - Growth forecasts for Gulf Cooperation Council states have been cut roughly in half since October, to about 2.0 percent overall. - Qatar's 2026 growth forecast has been revised to an expected contraction of about 8.6 percent, according to the report. - US-Iran peace talks in Islamabad ended without a deal, and a diplomatic push for a second round is under way. Summary: The IMF reports widespread economic disruption across Gulf energy producers, with several states facing contraction and others slowing. Forecasts that the region might rebound in 2027 depend on a rapid resolution of the conflict and a return to normalisation. Diplomatic efforts toward a second round of talks are ongoing.