[REVISION HISTORY]

Middle East economic impact of Iran conflict

Updated 11 times since CLSTR started tracking revisions of this situation.

What changed

2026-10-24 06:15 UTC → 2026-10-25 00:51 UTC · added ~~removed~~

The ongoing conflict involving Iran continues to drive significant economic instability across the Middle East. While the IMF previously predicted a regional GDP contraction of 0.3% for the Middle East and Central Asia, new ~~IMF~~ projections for 2026 indicate a ~~deeper~~ 1.3% contraction for the Middle East, North Africa, and Pakistan (MENAP). ~~This downturn is attributed to the military conflict involving the US, Israel, and Iran, which~~ The World Bank has ~~disrupted energy production, shipping routes, tourism, and trade.~~ provided a more severe outlook, projecting an average contraction of 2.1% for the region, with Gulf ~~oil producers remain~~ Cooperation Council (GCC) economies expected to contract by 4.3% to 4.8%. Disruptions to maritime traffic in the ~~most vulnerable. Bahrain,~~ Strait of Hormuz, which handles approximately 20% of global crude oil, have severely impacted oil-exporting nations. The IMF anticipates sharp declines for Kuwait, Iraq, Qatar, Bahrain, the UAE, and Saudi Arabia. Specifically, Kuwait, Iraq, and Qatar are projected to see ~~double-digit contractions in 2026, with a subsequent double-digit expansion in 2027 as logistics~~ real GDP declines of 16.7%, 16%, and ~~exports normalize. Iraq~~ 15.6%, respectively. Saudi Arabia is expected to ~~be among~~ contract by 2%, though it has mitigated some disruptions via its East-West Pipeline. Conversely, Oman is the ~~hardest hit, with a~~ only GCC nation projected ~~16% contraction~~ to grow in ~~real GDP for~~ 2026 due to its heavy reliance on crude oil exports. Recent IMF updates further specify that sharp declines are anticipated for several Gulf states, including Saudi Arabia and the United Arab Emirates, alongside Kuwait, Qatar, and Bahrain. Conversely, at 4.1%, while oil importers ~~have shown~~ like Egypt (5.1%) and Morocco (4.5%) show more ~~resilience, supported~~ resilience. Internal instability in Iran has reached a critical point, characterized by ~~remittances, tourism,~~ severe currency instability, a daily shortage of 10 million liters of gasoline, and ~~consumer protection policies. Despite~~ the ~~downturn,~~ resignation of Oil Minister Mohsen Paknejad. Regional trade is also hampered by massive congestion at border crossings like Bazargan and Rimdan. Despite these downturns, both the IMF ~~anticipates~~ and World Bank forecast a ~~sharp~~ massive rebound ~~to 6.6% growth~~ in 2027, ~~assuming~~ provided the conflict abates and ~~trade~~ shipping normalizes. However, even with this projected recovery, regional output is expected to remain below pre-conflict trajectories. Globally, the IMF has maintained its 2026 growth forecast at 3.1%, with a projected increase to 3.4% in 2027. While the global economy has shown resilience—partly driven by artificial intelligence investment—the Fund warns that margins for adjustment are narrowing due to geopolitical tensions, potential energy price spikes, and fiscal vulnerabilities.

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