IMF projects Gulf rebound in 2027. Can energy production keep pace?
Restoring shipping access in the Strait of Hormuz is only part of the recovery, as Gulf producers also need to repair damaged infrastructure to avoid further disruption to production and exports.
The International Monetary Fund forecast a downturn in Middle Eastern economies this year as the war that began in February continues to disrupt activity, according to its report released Tuesday. However, it expected the region to rebound next year, provided the Strait of Hormuz reopens by March 2027.
Details: The economies of the Middle East and Central Asia, which the Washington-based institution groups as one region, are forecast to contract by 0.3% in 2026, a sharp downgrade from the 1.9% expansion the IMF projected in April.
The IMF cited the prolonged disruption to shipping in the Strait of Hormuz, a conduit for one-fifth of global oil supplies in peacetime, for the downgraded outlook.
Kuwait, Iraq and Qatar face the most severe contractions in gross domestic product, at 16.7%, 16% and 15.6%, respectively. Bahrain is forecast to shrink by 11.3%.
The United Arab Emirates' economy is expected to contract by 3.9% this year before rebounding at a 7.7% growth rate in 2027.
Saudi Arabia is projected to contract by 3.3%, having partly offset the hit to its energy sector by boosting oil exports through the East-West Pipeline. In 2027, the kingdom's GDP is expected to rebound by 7.9%.
