The International Monetary Fund has warned that a prolonged Middle East war and further disruptions to energy production, shipping routes and critical infrastructure pose major risks to economies across the Middle East and Central Asia.
Jihad Azour, the IMF’s director for the Middle East and Central Asia, said the region’s economic outlook depends heavily on how quickly energy production and trade return to normal and whether countries can maintain economic stability.
Speaking at a news conference during the IMF and World Bank annual meetings in Bangkok, Azour explained that several factors had helped limit the initial impact of the energy crisis. These included government budget surpluses built before the war, alternative shipping routes, changes in demand and the use of existing energy inventories.
The energy shock followed US-Israeli attacks on Iran and Tehran’s subsequent closure of the Strait of Hormuz, a major route for global energy shipments.
However, Azour warned that these protections would not last indefinitely. Energy inventories have declined, while spare production capacity has become more limited. Further disruptions could therefore trigger much sharper increases in energy prices.
The IMF expects the economy of the Middle East, North Africa and Pakistan to shrink by 1.3% in 2026, compared with growth of 3.3% in 2025. The region is then forecast to rebound, with growth reaching 6.6% in 2027.
Azour cautioned that the recovery would not be evenly distributed, as countries face different levels of disruption and have varying abilities to absorb the economic shock.
In the Caucasus and Central Asia, economic growth is expected to slow to 5.2% in 2026 and 5% in 2027, down from 6.2% in 2025. Despite the slowdown, Azour said the region had handled the crisis relatively well. Inflation is also expected to continue easing from its elevated levels.
The IMF’s outlook highlights how much the region’s economic performance depends on the duration of the conflict, the restoration of energy supplies and the reopening of key trade routes. Further disruptions could deepen the downturn and make recovery more difficult.
