CNBC _ The International Monetary Fund projected on Thursday a sharp decline in economic output in the Middle East, North Africa, and Pakistan this year, driven by the war initiated by the United States and Israel against Iran, to be followed by a recovery with growth registering 6.6% in 2027, while warning that any additional disruptions in energy production could downgrade the outlook.
The IMF announced that the region's economic output is expected to contract by 1.3% as a result of the war's impact on energy production, shipping, tourism, trade, and confidence. Economic output is expected to surge significantly in 2027; however, output in these economies will generally remain below pre-war projections.
Oil-Exporting Economies More Heavily Impacted
The Fund stated in its report released on Thursday in Dubai that the impact of the war has been substantial yet uneven, with oil-exporting economies being more directly affected by disruptions in energy production and shipping, whereas oil importers have demonstrated greater economic resilience.
It pointed out that the projections are based on the assumption that the conflict will subside in early 2027 and that trade will gradually return to normal during the year, though it noted that the outlook remains shrouded in uncertainty due to "exceptionally high fog of war."
Growth in the Caucasus and Central Asia Heading Toward a More Sustainable Pace
On the other hand, the IMF stated that growth in the Caucasus and Central Asia is heading toward a more sustainable pace, projecting economic output growth of 5.2% in 2026 and 5% in 2027.
