WorldEconomy
IMF says Gulf economies will not get back to pre-war growth any time soon
The fund's Middle East director, Jihad Azour, said the Iran war would leave lasting damage. The IMF expects Saudi Arabia's economy to shrink 3.3% this year.
Key points
- Jihad Azour said the region would not return to its pre-war path in the medium term.
- The IMF expects Saudi Arabia's economy to contract 3.3% in 2026.
- The Middle East and Central Asia region is forecast to shrink 0.3% this year.
The economies of the Gulf will not return to the growth they were on before the Iran war in the medium term, the International Monetary Fund warned on Thursday, as missile strikes on Saudi Arabia’s airports and oil sites kept up.
“We will not go back to the pre-war trajectory in the medium term,” Jihad Azour, director of the IMF’s Middle East and Central Asia Department, told reporters. He said the shock would leave lasting damage across several sectors, disrupt infrastructure and force governments to spend more on making their economies resilient.
The fund’s latest forecasts, released on Tuesday, show the Middle East and Central Asia region, which is directly exposed to the war, shrinking 0.3% in 2026. Saudi Arabia is among the worst hit, with its economy expected to contract 3.3%, a rare recession for the kingdom.
IMF Managing Director Kristalina Georgieva warned on Wednesday that the continuing attacks on Saudi Arabia could hurt people “everywhere”.
The kingdom has been the target of repeated Houthi missile and drone strikes in recent days, which have hit airports, energy facilities and the headquarters of the state oil company Saudi Aramco. The Saudi-led coalition has answered with strikes on Houthi fuel and energy sites in northern Yemen.
Oil prices have stayed high through the fighting. Brent crude was trading at about $104 a barrel on Thursday morning.
Azour’s comments came as finance officials and economists met in Bangkok this week to discuss the headwinds facing the world economy.