The International Monetary Fund (IMF) has sharply downgraded its economic outlook for the Middle East, warning that ongoing geopolitical tensions are severely impacting growth, trade, and energy markets.

According to the latest update, regional growth is now projected at just 1.1% for 2026, down nearly 2.8 percentage points from earlier estimates.

The downgrade comes amid continued disruptions in oil exports and shipping through key routes like the Strait of Hormuz, where instability has reduced trade volumes and increased costs. Energy infrastructure damage and supply chain disruptions have further compounded the slowdown.

For oil-exporting economies such as Saudi Arabia and the UAE, reduced output and logistical challenges are limiting revenue growth. Meanwhile, oil-importing nations like Egypt face inflationary pressures due to rising import costs.

Despite the near-term slowdown, the IMF expects a rebound to 4.8% growth by 2027, assuming geopolitical conditions stabilize and energy flows normalize.

From a business perspective, the outlook signals caution for investors, particularly in sectors tied to global trade and energy. However, strong sovereign reserves and ongoing diversification efforts are expected to support recovery.

Source : Reuters.