IMF Gulf outlook: GCC economies seen shrinking 4.8% in 2026 on Iran war
The International Monetary Fund (IMF) expects Gulf Cooperation Council (GCC) economies to shrink 4.8% in 2026 as the US-Iran war hits oil output. Oman is the only GCC economy still forecast to grow.
A data update from FactIQ, written from International Monetary Fund figures. What is FactIQ?
Key figures
- Gulf Cooperation Council real GDP growth forecast, 2026
- -4.8%rebound to +9.1% forecast for 20272000-01-012031-01-01Gross domestic product (GDP), Constant prices, Percent change - Gulf Cooperation Council (GCC)
- Kuwait real GDP growth forecast, 2026
- -16.7%+17.1% forecast for 20272000-01-012031-01-01Gross domestic product (GDP), Constant prices, Percent change - Kuwait
- Oman real GDP growth forecast, 2026
- +4.1%the only GCC economy still growing2000-01-012031-01-01Gross domestic product (GDP), Constant prices, Percent change - Oman
- Saudi Arabia budget balance forecast, 2026, share of GDP
- -6.5%
Kuwait, Iraq and Qatar take the largest hit
The International Monetary Fund (IMF) published its October outlook for the Middle East and Central Asia. Real gross domestic product (GDP) is the inflation-adjusted value of what an economy produces. The IMF's 2026 forecasts for real GDP:- Kuwait: -16.7%
- Iraq: -16.0%
- Qatar: -15.6%
- United Arab Emirates (UAE): -3.9%
- Saudi Arabia: -3.3%
- Oman: +4.1%
The wider Middle East and North Africa shrinks 2.0%. Oil-related GDP for the region's oil exporters, including Afghanistan and Pakistan, falls 15.5%.
The IMF expects a sharp rebound in 2027 if oil flows recover
The forecast assumes flows through the Strait of Hormuz recover. On that basis, GCC GDP grows 9.1% in 2027. Iraq grows 19.0%, Qatar 18.8% and Kuwait 17.1%. Oil exporters' oil-related GDP rises 19.6%.Budgets and Iran's economy are under heavy strain
- GCC budget balance: -2.3% of GDP in 2026, against +0.6% in 2027.
- Saudi Arabia's budget balance: -6.5% of GDP.
- Iraq's budget balance: -15.1% of GDP.
- The GCC current-account surplus, the excess of income from abroad over payments abroad, narrows to 1.3% of GDP.
- Iran's GDP falls 7.6%, with average inflation of 78.6% in 2026.
Economies away from the Gulf hold up better
The Caucasus and Central Asia grow 5.2% and Egypt 5.1%. Pakistan grows 3.6% in fiscal year (FY) 2026 and 3.5% in FY27, but its inflation forecast rises from 7.1% to 9.9%. Inflation for the region's oil importers is 9.9% in 2026 and 11.9% in 2027. Libya's government debt was 154% of GDP in 2025. Separately, Germany's 2025 household disposable income was revised up to €2.957tn (trillion euros) from €2.876tn. That lowers household debt to 74.2% of disposable income in the fourth quarter of 2025, from 76.1%.Source: International Monetary Fund. See all IMF data in FactIQ.
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