Al-Shal: IMF's economic forecasts for GCC countries... more pessimistic
Al-Shal report reveals IMF's pessimistic forecasts for the contraction of GCC economies, except for Oman.
Translated by Qiyas from الجريدة — Original source
The International Monetary Fund’s (IMF) October 2026 estimates for the performance of Gulf Cooperation Council (GCC) economies this year were generally more pessimistic than those in its April report. Projections for the region’s combined economy shifted from a weighted positive growth rate of approximately 1.8% in April to a contraction of around -5.0% in October.
According to the “Shal” report, the April forecast anticipated positive growth for three economies within the bloc and contraction for three others. In contrast, the October report raised the number of economies expected to contract to five, with only one economy projected to maintain positive growth.
In detail, the Kuwaiti economy faced the highest contraction forecast, with an expected loss of approximately 16.7% of its value, a stark departure from the April estimate of -0.6%.
The Qatari economy recorded the second-highest expected contraction. While the April report projected a contraction of around -8.6%, the October estimate rose to -15.6%. Neither Kuwait nor Qatar has an alternative route for exporting oil and, in Qatar’s case, natural gas, besides the Strait of Hormuz.
The third-highest contraction rates belonged to the Bahraini economy, showing a significant divergence between the two reports: from -0.5% in April to -11.3% in October. We believe Bahrain’s greater negative impact stemmed primarily from its hospitality sector, which was thriving prior to the outbreak of the regional war.
The sharpest declines were recorded by the UAE economy, where its potential growth rate shifted from a positive 3.1% in April to a contraction of approximately -3.9% in October. This dual impact resulted from the war’s repercussions on both the oil and hospitality sectors.
The Saudi economy followed a similar, albeit slightly less severe, trajectory, with growth projections shifting from a positive 3.1% in April to a negative 3.3% in October.
Oman was the only economy that strengthened its positive growth outlook, rising from 3.5% in April to 4.1% in October. This improvement was supported by its geographic location outside the conflict zone and the Strait of Hormuz, as well as a significant rise in oil prices.
The Shal report stated: “We will not dwell extensively on the IMF’s forecasts for the potential performance of these economies in 2027, as the assumptions underpinning those projections are fragile, as evidenced by the discrepancies between the April and October reports. However, it is worthwhile to mention them for documentation purposes to measure the impact of estimation errors caused by heightened uncertainty.”
The IMF projects positive growth for all regional economies in 2027, with the highest forecast for Qatar at approximately 18.8%, followed by Kuwait at 17.1%, Bahrain at 13.9%, Saudi Arabia at 7.9%, the UAE at 7.7%, and Oman at 2.2%.
It is worth recalling that our countries are among the hardest hit by this war, despite not being direct parties to it. It is in their interest to leverage all their influence and relationships to halt the conflict and mitigate the risks of its escalation.
