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IMF Cuts 2026 Growth Forecasts for Gulf Economies Due to Prolonged Hormuz Closure
- On Tuesday, the International Monetary Fund significantly lowered its 2026 economic projections for Gulf nations, citing the prolonged closure of the Strait of Hormuz. The Middle East and North Africa economy is estimated to contract by 2 per cent this year.
- Tanker traffic declined sharply following October 9 attacks, with confirmed total Hormuz clearance standing at roughly 11.9 million barrels per day, about 30 per cent below pre-war baseline. The IMF assumes gradual reopening by March 2027.
- Bahrain, Kuwait, and Qatar face double-digit contractions of 11.3, 16.7, and 15.6 per cent respectively in 2026, while the UAE and Saudi Arabia also experience economic downturns. These Gulf nations comprise the only region expected to record an overall contraction this year.
- IMF chief economist Silvana Tenreyro attributed the outlook to a negative supply shock from the Iran war and a positive demand shock from the AI infrastructure boom. High debt combined with elevated financing costs has heightened fiscal risks.
- Treasury yields recently reached their highest levels since 2002, while global headline inflation is set to increase to 4.7 per cent in 2026. Global bonds face mounting pressure from concerns over higher energy prices and elevated interest rates.
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War in the Middle East is deepening global inequality, IMF says
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Coverage Details
Total News Sources25
Leaning Left3Leaning Right0Center7Last UpdatedBias Distribution70% Center
Bias Distribution
- 70% of the sources are Center
70% Center
L 30%
C 70%
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