“Growth is still projected to increase in 2025 and 2026, but at a considerably slower pace than anticipated last October,” the IMF said in its regional report published today.

The lender lowered growth projections from 4% to 2.6% for 2025, and from 4.2% to 3.4% for 2026.

The revision reflects “spillovers from global trade tensions and high global uncertainty, a more gradual recovery in oil production, the lingering effects from conflicts in the region, and slower-than-expected progress on structural reforms in some countries,” it said.

Tariffs put in place by US President Donald Trump, however, are not expected to have a direct impact on the region.

“Economic integration between countries in the region and the US is limited”, and the energy sector has been spared from the tariffs, Jihad Azour, director of the IMF for the Middle East and Central Asia, told AFP.

“However, uncertainty weighs worldwide on investment prospects, financial markets and oil prices, amplifying a downturn,” he said.

In 2024, average growth in the region slowed to 1.8% – from 2.1% the year before – due to “ongoing conflicts and extended voluntary oil production cuts”.

Growth forecasts for 2025 for the region’s oil-exporting countries have been revised down by 1.7 percentage points compared to earlier estimates.

Significant disparities remain between the region’s oil-rich countries, with growth projected at 3% this year for Gulf states, while Iraq is expected to see a 1.5% decline.

In war-torn Sudan, Yemen and the Palestinian territories, economic prospects are bleak.

“International aid has decreased by about 25% since 2021″, a trend likely to accelerate,” Azour said.

The IMF has not provided projections for Lebanon, which is still reeling from the effects of a devastating Israel-Hezbollah war and a 7.5% economic contraction in 2024.

No estimates were available for Syria, which is emerging from more than a decade of civil war.

“Reconstruction could trigger recovery in those countries, but that would require significant funding,” Azour said.

“Gulf countries are interested in helping conflict-scarred countries rebuild, but it is important that these countries implement the necessary reforms to restore economic and social balance and regain trust,” he said.