IMF: Prolonged Regional War Poses Greatest Risk to Economies of Middle East and Central Asia; Energy Reserves Decline and Spare Production Capacity Shrinks, So Resumed Disruptions Could Lead to Much Broader Price Adjustments

The IMF announced that a prolonged war in the Middle East and its consequences for energy production, shipping routes and critical infrastructure constitute the greatest risk to the economies of the Middle East and Central Asia.

The International Monetary Fund announced: The prolongation of the war in the Middle East and its consequences for energy production, shipping routes and critical infrastructure are the greatest risks for the economies of the Middle East and Central Asia.

Jihad Azour, director of the Middle East and Central Asia Department of the International Monetary Fund, told reporters that this war will cause an unbalanced economic shock to the entire region, and the countries that are directly affected by it are facing severe pressure.

According to him, the excess supply available before the war, alternative routes, adjustment of demand and extensive withdrawal of reserves have helped to contain the impact of the shock caused by the American and Israeli attacks on Iran and the subsequent closure of the Strait of Hormuz by Tehran.

"These reserves have given us some time, but they are limited," Azour said. Reserves have decreased and excess production capacity has also decreased; Therefore, a resumption of disruptions could lead to a much wider price adjustment."

He added that the International Monetary Fund predicts that the economy of the Middle East and North Africa region, including Pakistan, will face a severe contraction of 1.3 percent after growing by 3.3 percent in 2025. However, the region is expected to achieve strong but uneven growth in 2027, with economic growth reaching 6.6 percent.

At the same time, Azour emphasized that there are significant differences between the countries of the region.