IMF projects MENAP growth of 6.6 percent in 2027 after 2026 contraction
The Middle East, North Africa, Afghanistan and Pakistan region is projected to grow 6.6 percent in 2027, the International Monetary Fund says, after a projected 1.3 percent contraction in 2026 caused by conflict-related disruption to hydrocarbon output, shipping, aviation, tourism and supply chains. The Fund's baseline assumes the conflict begins to ease in early 2027 and trade normalises gradually through the year.
For Pakistan, the forecast sits within a regional grouping dominated by Gulf oil exporters, and the IMF's figures do not isolate Pakistan's own trajectory. The Fund said oil-importing economies in the region have been more resilient than exporters, supported by domestic demand, remittances, tourism receipts, favourable financing conditions and policy support, while the shock for importers travels mainly through higher energy and food costs, inflation, trade balances and financial conditions. The IMF has previously estimated that a 10 percent rise in average annual oil prices can cut growth in an average MENAP emerging-market oil importer by about half a percentage point and lift inflation by roughly one percentage point.
The rebound is concentrated among hydrocarbon producers. Saudi Arabia and the UAE are expected to record recessions in 2026 but remain comparatively less affected than Bahrain, Kuwait and Qatar, which along with Iraq are projected to post double-digit contractions before correspondingly large recoveries. Oman is the exception among GCC states, with its economy still expected to expand in 2026. The Fund said the 2027 acceleration is partly a restoration of lost output rather than a conventional demand-driven boom, and that output across much of the region would remain below its pre-conflict trajectory.
Jihad Azour, Director of the IMF's Middle East and Central Asia Department, said the outlook depends on how quickly energy production and trade normalise and on governments' ability to maintain macroeconomic stability during the adjustment. The Fund flagged a more prolonged conflict as the principal downside risk, alongside tighter global financial conditions should investors reassess expected productivity gains from artificial intelligence or if inflation and fiscal concerns push interest rates higher. It urged targeted and temporary household support rather than broad subsidies, and called for rebuilt fiscal buffers, stronger domestic revenue mobilisation and central-bank independence.
The MENAP projection is distinct from the IMF's broader Middle East and Central Asia forecast in its October World Economic Outlook, which includes the Caucasus and Central Asia and puts growth at 6.3 percent in 2027. That region is expected to grow 5.2 percent in 2026 and 5 percent in 2027, a contrast the Fund said underscores how unevenly the shock has been felt.
