IMF expects severe contraction in Iraq’s economy in 2026

Baghdad (IraqiNews.com) – The International Monetary Fund (IMF) projected on Thursday that Iraq’s economy will be the most hit by oil and transportation disruptions in the Middle East and Central Asia in 2026.

The IMF also predicted a robust economic rebound in 2027, when energy market conditions improve and commerce resume, local news outlet Shafaq News reported.

In its recent World Economic Outlook report, the IMF projected that Middle Eastern and Central Asian countries will see a sharp drop in growth to 0.7 percent in 2026, before rebounding to 6.5 percent in 2027. These forecasts assume that energy interruptions will last longer than previously predicted.

The economies of Iraq, Kuwait, and Qatar, which are heavily reliant on commodities, will experience significant impacts from disruptions in energy production and transportation. These nations are expected to face an economic downturn in 2026, followed by growth rates exceeding ten percent in 2027.

The anticipated fall in 2026 will mainly result from the disruption in oil production and distribution, especially by those nations that depend heavily on energy exports, but the recovery in 2027 will be brought about by a reduction of these shocks and resumption of business activities.

The IMF’s latest prediction reduces the region’s growth forecast for 2026 by 1.2 percent from the April report, while the 2027 forecast is lifted by about 1.9 percent, suggesting expectations of a stronger rebound.

The IMF, on the other hand, expects Saudi Arabia to remain largely unaffected due to its more diverse export channels, with an economic growth of 1.7 percent in 2026 and 5.5 percent in 2027.