The economies of the Middle East and Central Asia are reportedly set to shrink in 2026, driven by the fallout from the US-Israeli regime's military and economic pressure on Iran. According to the International Monetary Fund's (IMF) latest economic outlook released on Tuesday, the region’s gross domestic product (GDP) is forecast to contract by 0.3 percent, marking a severe downward revision from the 1.9 percent expansion previously projected in April.

The Washington-based institution attributed the downgraded outlook to prolonged disruptions in shipping through the Strait of Hormuz, a crucial maritime chokepoint that handles one-fifth of global oil supplies under normal conditions. Kuwait, Iraq, and Qatar are projected to experience the most devastating contractions, with their GDPs expected to plummet by 16.7 percent, 16 percent, and 15.6 percent, respectively. Meanwhile, Bahrain’s GDP is forecast to shrink by 11.3 percent, and Iran's economy is projected to contract by 7.6 percent.

Saudi Arabia, which has allegedly managed to partially offset energy sector losses by redirecting oil exports through the East-West pipeline, is still projected to record a negative growth of 3.3 percent. In contrast, Kyrgyzstan is expected to buck the regional trend with the strongest growth, forecasting a 9 percent GDP expansion. Overall, the Middle East and Central Asia region stands out as the only major geographic area anticipated to experience negative growth in 2026.

While global economic activity has purportedly shown resilience this year, the IMF warned that the broader international economy remains vulnerable to numerous downside risks. The organization stated that further conflict escalations, shifting expectations surrounding artificial intelligence (AI), renewed trade tensions, and mounting fiscal vulnerabilities could severely undermine future global growth.

Source: www.aljazeera.com