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World Bank forecasts Middle East economic contraction in 2026
The World Bank projects a significant economic downturn for the Middle East and neighboring regions in 2026, with an average contraction of 2.1%. This follows a period of 3.3% growth in 2025. The decline is attributed to the ongoing conflict involving Iran and subsequent disruptions to maritime traffic in the Strait of Hormuz, which handles approximately 20% of global crude oil.
Gulf Cooperation Council (GCC) economies are expected to face a sharper contraction of 4.3% in 2026. However, the bank forecasts a potential massive rebound in 2027, with GCC economies potentially growing by 10.3% and the wider MENAAP region (excluding Iran) growing by 7.8%, provided the conflict subsides and hydrocarbon production and shipping return to normal.
Saudi Arabia is expected to contract by 2% in 2026 before a projected 7.9% expansion in 2027. The kingdom has mitigated some export disruptions through its East-West Pipeline, which directs crude to the Red Sea. The economic instability is also expected to impact tourism, aviation, and logistics, while driving up inflation due to rising food and freight costs.
Entities
Gulf Cooperation Council · Iran · Saudi Arabia · Strait of Hormuz · Thomas Kuruvilla · World Bank
Claims
What the coverage asserts, and how many sources carry each claim.
- [● 4 SOURCES] The conflict has caused a decline in maritime traffic through the Strait of Hormuz. eldinero.com.do · khaleejmag.com · www.arabnews.pk · theobjective.com
- [● 4 SOURCES] The Middle East and neighboring countries' economy is projected to contract by an average of 2.1% in 2026. eldinero.com.do · khaleejmag.com · www.arabnews.pk · theobjective.com
- [● 2 SOURCES] The economic shock is expected to impact tourism, aviation, and logistics. eldinero.com.do · theobjective.com
- [● 4 SOURCES] Gulf Cooperation Council economies are expected to contract by 4.3% in 2026. eldinero.com.do · khaleejmag.com · www.arabnews.pk · theobjective.com
- [● 2 SOURCES] Saudi Arabia’s economy is forecast to contract by 2% in 2026 before expanding by 7.9% in 2027. khaleejmag.com · www.arabnews.pk
- [● 4 SOURCES] The economic downturn is driven by the conflict involving Iran and disruptions in the Strait of Hormuz. eldinero.com.do · khaleejmag.com · www.arabnews.pk · theobjective.com
- [● 2 SOURCES] Importing nations in the region are expected to grow by 4.3% this year. eldinero.com.do · theobjective.com
- [● 4 SOURCES] If the conflict subsides by the end of 2026, growth in the MENAAP region excluding Iran could reach 7.8% in 2027. eldinero.com.do · khaleejmag.com · www.arabnews.pk · theobjective.com