The International Monetary Fund says energy-rich Middle Eastern economies may recover, but not within the medium term, its regional chief said on Thursday. The remarks came as fighting continued between Saudi Arabia and Yemen’s Houthis.
The IMF projects a broad contraction across Gulf economies after months of war that began in Iran and has since spread to Saudi Arabia and Yemen. Maritime energy traffic is still affected.
Gulf economies face lasting damage, IMF warns
Regional director Jihad Azour told reporters in Bangkok that the region will not return to its pre-war path in the medium term. He cited a “scarring impact on various sectors”, saying the shock will also disrupt some infrastructure and require extra spending to build resilience.
Officials and experts meeting in Bangkok this week discussed global headwinds, including persistently high energy costs and doubts over how long the artificial intelligence boom can last. On Tuesday, the IMF projected that the Middle East and Central Asia region, which is directly exposed to the Iran war, will contract 0.3 percent in 2026.
Saudi Arabia faces rare recession amid attacks
Saudi Arabia is among the worst affected, with its economy projected to shrink 3.3 percent. The forecast points to a rare recession for the kingdom, which has long been cushioned by strong energy exports.
On Wednesday, IMF chief Kristalina Georgieva warned that ongoing attacks targeting Saudi Arabia could affect people “everywhere”. A violent battle between a Saudi-led coalition and the Houthis has sharply escalated in recent days, with fatal missile strikes hitting airports and energy facilities, as well as the headquarters of the state oil giant Aramco.
