The IMF forecasts Gulf economies contract in 2026 as Hormuz stays shut, with Kuwait down 16.7% and Saudi Arabia 3.3%, its World Economic Outlook said on October 13.

The Middle East and Central Asia is expected to contract by 0.3% this year, a downward revision of 2.2 percentage points from April, when the fund projected growth of 1.9%.

According to the data, the Middle East and North Africa is forecast to shrink by 2.0%, the only region expected to contract, as a longer closure of the strait than the IMF assumed six months ago disrupts energy output and transport.

Before the war, about 20mn barrels of oil a day passed through Hormuz. The IMF says prices almost doubled in the early months of the conflict before settling 20% to 40% above pre-war levels, and puts the 2026 average at $96 a barrel, up about 41%. Its baseline assumes the strait reopens gradually from March 2027, with pre-war conditions returning by October 2027.

IMF chief economist Silvana Tenreyro told reporters in Bangkok that "the outlook is highly uneven". The report says growth "is being reallocated across countries according to their exposure to the war-induced supply shock". The fund holds global growth at 3.1% in 2026 and lifts it to 3.4% in 2027, with global inflation at 4.7% this year.

Saudi Arabia is expected to contract 3.3% in 2026 before rebounding 7.9% in 2027, up from the 5.5% the fund forecast in July. The fund says the kingdom is "somewhat less affected, as an economy with more diversified export routes". The Saudi economy grew 4.6% in 2025. AFP reports that the forecast was made before this month's attacks on Riyadh airport. In its Article IV report published in August 2025, the fund said the Saudi economy "has demonstrated strong resilience to shocks".

The UAE is expected to contract 3.9% this year, a cut of 7 percentage points from April, before growing 7.7% in 2027. In its Article IV report published on December 8, 2025, the IMF projected that UAE growth would "outpace both the GCC and global averages" and said the financial system "has absorbed recent market volatility well".

Kuwait is expected to suffer the deepest contraction in the Gulf at 16.7% this year, followed by a rebound of 17.1% in 2027. The IMF groups Kuwait with Bahrain, Iraq and Qatar as "commodity producers most affected by disruptions to energy output and transport", and projects "double-digit contractions of their economies in 2026". Its Article IV report published in February 2026 said "reform momentum has been building" in Kuwait, pointing to the enacted Financing and Liquidity Law.

Qatar is expected to contract 15.6% in 2026 before expanding 18.8% in 2027, the strongest rebound forecast for any GCC state. The IMF Board concluded its 2026 Article IV consultation with Qatar on May 6, but the authorities have not said whether the report will be published.

Bahrain is forecast to shrink 11.3% this year and to recover 13.9% in 2027. The fund's Executive Board said in January that Bahrain needs "well-designed and sustained medium-term fiscal consolidation", with government gross debt at 134% of GDP in 2024 and projected to reach about 150% by 2026.

Iraq is expected to contract 16% this year after a 0.4% fall in 2025, before growing 19% in 2027. Inflation is forecast to rise to 3.5% in 2026, and the current account deficit is expected to widen to 10.8% of GDP before moving to a 2.2% surplus in 2027. The IMF said in its Article IV report published in July 2025 that Iraq "has managed to uphold domestic stability despite regional turmoil", while flagging payment arrears in 2024 and fiscal risks from lower oil prices.

Oman is the only Gulf economy forecast to grow in 2026, by 4.1%, slowing to 2.2% in 2027. AFP reports a lower figure of 2.4% for Oman this year, which IntelliNews has not been able to reconcile. The IMF said in its Article IV report published in January that Oman's "fiscal and external positions remain solid despite lower oil proceeds".

Iran is expected to contract 7.6% this year, with inflation forecast at 78.6%. The IMF says growth "is revised downward amid resumed military exchanges, the reimposition of the naval blockade, and enhanced sanctions". Jordan is forecast to grow 2.7% this year.

IntelliNews has previously reported on the IMF's forecasts of contractions across the Middle East.

The fund expects the Middle East and Central Asia to grow 6.3% in 2027 if Hormuz reopens as assumed.