IMF: Iraq faces a sharp economic contraction in 2026
IMF: Iraq faces a sharp economic contraction in 2026
2026-07-09
Shafaq News – Follow-up
The International Monetary Fund (IMF) predicted on Thursday that the Iraqi economy would be the most affected by energy and transport disruptions in the Middle East and Central Asia region during 2026, but it predicted a “strong” economic recovery during 2027 as energy conditions improve and trade activity returns.
The IMF said in its July 2026 update to the World Economic Outlook that Middle Eastern and Central Asian economies will experience a sharp slowdown in growth to 0.7% during 2026, before jumping to 6.5% in 2027. These projections reflect the continuation of energy disruptions for a longer period than previously expected.
He noted that Iraq, Kuwait and Qatar, as commodity-producing countries most affected by disruptions in energy production and transportation, are expected to experience a sharp contraction in their economies during 2026, before recording growth rates exceeding 10% during 2027 as production and exports return to better levels.
The IMF indicated that the expected decline in 2026 is mainly related to the effects of disruptions to oil production and transportation, particularly for countries that rely heavily on energy exports, while the recovery in 2027 will be driven by the easing of shocks and the return of economic activity.
He explained that his new forecast represents a reduction in the region’s growth in 2026 by 1.2 percentage points compared to last April’s report, while raising the forecast for 2027 by about 1.9 percentage points, as a result of expectations of a greater recovery after the end of the unrest.
In contrast, the IMF predicted that Saudi Arabia would be relatively less affected due to its more diversified export routes, with its economy expected to grow by 1.7% in 2026 and rise to 5.5% in 2027.
The IMF stressed that the effects of the current crisis vary among countries depending on their reliance on energy exports, their ability to diversify trade routes, and the size of their reserves, noting that oil-producing countries may be exposed to strong shocks in the short term, but have opportunities for a faster recovery as energy markets stabilize.
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