Kathmandu, October 15
The International Monetary Fund (IMF) expects energy-rich Middle Eastern economies to recover from the impact of the war, but not in the medium term, the organisation’s regional director said on Thursday, as fighting between Saudi Arabia and Yemen’s Houthi rebels continued.
The warning comes as the IMF projects an economic contraction across Gulf economies following months of conflict that began in Iran and spread to Saudi Arabia and Yemen. Maritime energy traffic has also been disrupted.
“We will not go back to the pre-war trajectory in the medium term because this shock will have a scarring impact on various sectors and also will disrupt a certain number of infrastructure, and will require additional spending in order to increase resilience,” IMF regional director Jihad Azour told reporters.
The warning comes as officials and experts gathered in Bangkok this week to discuss challenges facing the global economy, including persistently high energy costs and concerns over the sustainability of the artificial intelligence boom.
On Tuesday, the IMF projected that the Middle East and Central Asia region, which is directly exposed to the war in Iran, would contract by 0.3 per cent in 2026.
Saudi Arabia is among the hardest-hit economies, with its gross domestic product projected to shrink by 3.3 per cent. The forecast points to a rare recession for the Gulf kingdom, whose economy has long been supported by robust energy exports.
On Wednesday, IMF chief Kristalina Georgieva warned that continued attacks targeting Saudi Arabia could have consequences for people “everywhere”.
Fighting between a Saudi-led coalition and Yemen’s Houthis has escalated sharply in recent days, with deadly missile strikes hitting airports, energy facilities and the headquarters of Saudi Aramco, the kingdom’s state-owned oil giant.
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