IMF forecasts 1.3% economic contraction across Middle East, North Africa, and Pakistan

The International Monetary Fund forecasts that the combined economy of the Middle East, North Africa, and Pakistan will contract by approximately 1.3 percent in 2026, compared to 3.3 percent growth in 2025. The IMF warns that prolonged military conflict and disruptions to energy production and shipping pose substantial risks to regional economies. The organization expects a recovery of approximately 6.6 percent in 2027, contingent on improvements in regional security.

The contraction is attributed to reduced inventories, limited spare energy production capacity, and continued infrastructure damage in war-affected countries. Jihad Azour, the IMF’s director for the Middle East and Central Asia, noted that countries directly affected by war are facing significant economic pressure.