IMF says Middle East, North Africa and Pakistan GDP to contract 1.3pc in 2026

The IMF expects combined economic output in Pakistan, the Middle East and North Africa to shrink 1.3pc in 2026, citing the war against Iran and its effects on energy production, shipping, tourism, trade and confidence. In its regional outlook released in Dubai on Thursday, the Fund projected a 6.6pc rebound in 2027, while cautioning that output would generally remain below pre-war expectations.

The forecast assumes the conflict eases in early 2027 and trade gradually returns to normal, but the IMF described the outlook as exceptionally uncertain. Further interruptions to energy supplies or trade routes could push energy prices higher, while tighter financial conditions are another risk; the Fund said oil importers had been more resilient than exporters. It also urged policymakers to protect price stability and fiscal sustainability, preserve central bank independence and pursue reforms to support productivity and jobs.