The IMF projects economic growth in the Middle East, North Africa and Pakistan to reach 6.6% in 2027, rebounding from a 1.3% contraction expected in 2026 after 3.3% growth in 2025, as the conflict disrupts oil production, shipping and trade. The recovery is expected to be uneven and depend on restoring energy production and trade, and output would remain below the pre-war medium-term trend even with the rebound. Oil exporters face the sharpest contraction, while oil importers have been more resilient thanks to workers' remittances, tourism, favourable financial conditions and government support, though governments' room to help is narrowing. The IMF warned that a prolonged conflict is the biggest downside risk and recommended prioritising price stability, rebuilding fiscal buffers through targeted, temporary cash transfers rather than broad subsidies, and institutional reforms.
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