IMF Predicts 1.3% Contraction for Middle East, North Africa and Pakistan in 2026
Updated
Summary
The IMF predicts the Middle East, North Africa and Pakistan area will shrink by 1.3% in 2026, compared with 3.3% expansion in 2025.
The IMF said the Middle East war is causing a highly uneven economic shock across the region, with severe strain on directly affected states. An IMF official identified prolonged conflict as the biggest risk.
Why it matters
For oil exporters hit by the war, the IMF expects a sharp contraction in 2026 followed by a rebound in 2027, but says output will remain below pre-war forecasts. It said pre-war surpluses, alternative paths and demand shifts helped mitigate the oil-output shock, although those cushions are limited.
The IMF said inventories are lower and spare capacity is tighter, meaning fresh disruption could trigger bigger price shifts. It urged countries to rebuild buffers, prioritize price stability, and use tighter monetary policies and prudent fiscal measures.