Gulf economies are set to shrink 4.8 per cent this year as the Iran war disrupts energy exports and weighs on non-oil activity, before rebounding 9.1 per cent in 2027, the International Monetary Fund said on Thursday.
The forecast marks a sharp reversal for the six-member Gulf Co-operation Council, with the IMF cutting its 2026 growth projection by 6.8 percentage points from the 2 per cent expansion it expected in April, according to its Regional Economic Outlook released in Dubai.
The bloc's non-oil economy is also forecast to contract 0.8 per cent this year before returning to 4.5 per cent growth in 2027, underscoring the wider economic fallout from the conflict.
Oil-importing countries have faced their "most severe shock" from the Iran war, Jihad Azour, director of the IMF's Middle East and Central Asia department, told reporters at the report's launch.
The conflict is also eroding the Gulf's financial buffers. The IMF expects the bloc's current-account surplus to narrow to 1.3 per cent of gross domestic product this year, from 5 per cent in 2025, while its combined fiscal deficit widens to 2.3 per cent of GDP from 0.8 per cent. Inflation is projected to rise to 2.7 per cent.
Oil and gas production among Gulf exporters directly affected by the conflict plunged from 33 million barrels a day in February to about 19 million in May, with Qatar's output falling as much as 86 per cent, the fund said.
Exports have since staged a partial recovery. Gulf crude shipments rose to more than 75 per cent of pre-war levels in September, according to the International Energy Agency.
The IMF's forecast for a sharp rebound next year hinges on an end to hostilities and the gradual resumption of shipping through the Strait of Hormuz in early 2027.