IMF forecasts 1.3 percent contraction in West Asia output this year

The International Monetary Fund (IMF) has forecast a sharp drop in economic output in the Middle East, North Africa and Pakistan this year, attributing the decline to the US-Israel war against Iran. In a statement, the IMF said the region's output was expected to contract by 1.3 percent as a result of the war's impact on energy production, shipping, tourism, trade and confidence.

The fund said its baseline scenario assumed that the conflict would abate in early 2027 and that trade would gradually normalise during the year. Under that assumption, the IMF projected a rebound to 6.6 percent growth in 2027.

The IMF cautioned, however, that the outlook remained clouded by what it described as exceptionally high uncertainty. "The main risks derive from further disruption to energy production and trade routes that could drive energy prices higher," the statement said.

According to Mehr News, the IMF assessment covers the Middle East, North Africa and Pakistan, and links the projected contraction directly to the war's effects on regional energy output, shipping, tourism, trade and overall economic confidence.