The IMF's World Economic Outlook for October 2026 projects that ongoing hostilities throughout the Middle East — particularly if a closure of the Strait of Hormuz materialises — will push output in that region, along with Central Asia, into contraction by 2026. The area's economic expansion rate is set to contract by 0.3 percentage points in 2026, a figure that sits 2.2 points below what the fund anticipated in its April outlook. Output across the area recorded a 3.7 percent expansion during 2025.

Forecasters place 2027 growth at 6.3 percent, a figure running 1.7 percentage points above what earlier outlooks had pencilled in. Among Gulf oil producers with smaller output capacities, analysts have flagged a potential for more pronounced economic contraction tied to vulnerabilities in energy generation and the movement of goods.

Four Gulf states — Bahrain, Iraq, Kuwait, and Qatar — are projected to record output declines of ten per cent or more in 2026, before returning to growth the following year once production and logistics return to more stable footing. Projected output for Kuwait stands at a contraction of 16.7 percent, while Iraq faces an estimated decline of 16.0 percent, Qatar of 15.6 percent, and Bahrain of 11.3 percent over the course of the current year.

Projected figures for 2027 point to a pronounced turnaround across four Gulf and Middle Eastern economies — Iraq at 19.0 percent, Qatar at 18.8 percent, Kuwait at 17.1 percent, and Bahrain at 13.9 percent expansion.

Forecasts place Saudi Arabia on a path of 3.3 percent contraction through 2026, followed by a rebound of 7.9 percent growth in 2027, underpinned by the country's access to a broader range of export channels. GDP figures for Saudi Arabia put annual expansion at 4.6 percent across 2025. Projections place the UAE economy on a path toward a 3.9 percent contraction in the current year, with analysts pointing to a 7.7 percent expansion taking hold by 2027. Forecasts place Oman's economy on a 4.1 percent expansion path by 2026.

Forecasts place output across the Iranian economy on a downward path of 7.6 percent by 2026, a contraction tied to active armed conflict, a blockade at sea, and a tightening web of international sanctions, while price growth is projected to reach 78.6 percent over the same period.

According to the IMF's findings, closure of the Strait of Hormuz cut off the passage of roughly 20 million barrels of oil each day — a volume representing approximately one quarter of all oil moving by sea globally — at a point before hostilities had begun. Shipments from Gulf producers were rerouted through alternative ports, while output elsewhere climbed by two million barrels a day. Oil prices rose when fighting broke out, at one point nearly doubling from pre-conflict levels, before pulling back to land somewhere between 20 percent and 40 percent above their pre-war levels.

The IMF observed that where Gulf economies stand to gain from the global expansion of artificial intelligence technology remains constrained, with any transfer of benefits through tech exports tied closely to whether disrupted maritime trade corridors can be reopened.

A revised growth projection of 7.0 percent set India apart from the broader pattern, marking it as a notable outlier in the forecast round. According to the Fund's assessment, near-term forecast reductions fell most heavily on economies with direct exposure to the Middle East conflict, along with energy-importing nations in the emerging and developing world — India being among those left outside that grouping.

Drawn from the World Economic Outlook, the assessment noted that raw material prices face upward pressure and heightened instability if armed hostilities in the Middle East or Ukraine drag on or broaden in scope.