The International Monetary Fund forecasts a 1.3% contraction in 2026 for the region comprising the Middle East, North Africa and Pakistan, compared with growth of 1.4% still expected in April. The regional report, published on Thursday, 22 October, in Dubai, thus cuts the forecast by 2.7 percentage points.
The IMF attributes this reversal to the war against Iran waged by the United States and Israel, which is disrupting energy production, shipping, tourism, trade and confidence. Its baseline scenario assumes the conflict will ease in early 2027 and that trade will gradually normalise.
In this scenario, regional growth would rebound to 6.6% in 2027, but activity would generally remain below the levels projected before the war. The aggregate does not mean that every North African economy will fall into recession.
Oil-exporting countries hit by disruptions to production and shipments face the most severe shock. Importers are holding up better thanks to migrant remittances, tourism, favourable financial conditions and consumer support measures, according to the Fund.
The institution identifies the main risks as a further disruption to energy production and trade routes, as well as a tightening of external financial conditions.