Brief
IMF warns Gulf economies could contract sharply amid war fallout
The IMF projects Saudi Arabia, Qatar and the UAE to shrink by 3‑4% this year, with recovery only possible after 2027 if energy and shipping normalize.
By Felo News Desk · Published
Speaking in Bangkok on Thursday, IMF regional director Jihad Azour warned that the Gulf’s pre‑war growth momentum could be lost for years, citing damage to infrastructure and ongoing Houthi attacks on Saudi energy facilities.
Azour said the IMF projects Saudi Arabia’s economy to shrink by 3.3% in 2026, Qatar’s by 15.6% and the UAE’s by 3.9%. The fund added that a return to growth is unlikely until 2027, and only if energy production and maritime traffic resume normal levels.
The IMF also highlighted the broader regional impact, noting that airlines, hotels, shipping firms and construction companies are already feeling the pinch. Investors are reassessing the Gulf’s reputation as a safe haven, and sovereign wealth funds may struggle to cover lost commerce and reconstruction costs.
Pakistan, a major remittance recipient, could feel secondary effects. Remittances rose 14% to $10.9 billion in July‑September, with $2.686 billion from Saudi Arabia and $2.23 billion from the UAE, offering some cushion but also exposing the country to a prolonged Gulf downturn.
Key facts
- IMF projects Saudi Arabia's economy to shrink by 3.3% in 2026. (dailytimes.com.pk)
- Qatar is forecast to contract by 15.6% this year, according to the IMF. (dailytimes.com.pk)
- UAE's economy is expected to fall by 3.9% in 2026, IMF says. (dailytimes.com.pk)
- Remittances to Pakistan rose 14% to $10.9 billion in July‑September, with $2.686 billion from Saudi Arabia and $2.23 billion from the UAE. (dailytimes.com.pk)
Sources
- [1] dailytimes.com.pk — originally reported as “Long Shadow of War”
