IMF Cuts Middle East Growth Forecast to 1.4% Amid War Impact

The International Monetary Fund has sharply downgraded its growth forecast for Middle East economies to 1.4%, citing the economic fallout from the ongoing regional conflict and its impact on productivity and the energy sector.

Speaking in Washington, Jihad Azour, Director of the IMF’s Middle East and Central Asia Department, said the war has delivered a significant shock to the region, disrupting economic activity and weighing heavily on key sectors.

He stressed that the current crisis underscores the urgent need for continued economic reforms and diversification, urging countries to strengthen private sector participation and reduce reliance on traditional revenue sources, particularly energy.

The revised outlook was presented during the IMF and World Bank Spring Meetings, currently taking place in the U.S. capital, where policymakers are assessing the broader global impact of escalating geopolitical tensions.

The conflict in the Middle East is increasingly being viewed as a third major shock to the global economy, following the COVID-19 pandemic and the Russia-Ukraine war. Officials warn that prolonged instability could further slow global growth while pushing inflation higher, particularly in emerging and developing economies.

One of the most pressing concerns remains the disruption of global energy flows, especially through the Strait of Hormuz, a critical route that handles a significant share of the world’s oil supplies. Any sustained disruption in this corridor could amplify price volatility and strain global supply chains.

Against this backdrop, the IMF emphasized the importance of policy coordination, structural reforms, and resilience-building measures to help economies navigate the current uncertainty and mitigate long-term risks.