GCC Growth to Drop 4.8% in 2026 Before 9.1% Rebound, IMF Warns
At the launch of the International Monetary Fund’s Regional Economic Outlook in Dubai, new figures show the sharp reality facing the Gulf Cooperation Council this year. GCC economies are set to contract by 4.8% in 2026 after conflict disrupted energy exports and slowed non-oil operations across the region.
Inflation to Reach 2.7% as Non-Oil Sector Shrinks 0.8%
The IMF slashed its 2026 growth projection by 6.8 percentage points from the 2% expansion expected in April, shifting the regional non-oil economy into a 0.8% contraction before a projected return to 4.5% growth in 2027. Local household budgets face added pressure as regional inflation rises to 2.7%, while the bloc’s combined fiscal deficit widens to 2.3% of gross domestic product from 0.8%.
Energy trade disruptions saw GCC oil and gas production plunge from 33 million barrels per day in February to roughly 19 million in May, though crude shipments recovered past 75% of pre-war levels by September. The GCC current-account surplus is expected to narrow to 1.3% of GDP this year, down from 5% in 2025.
The IMF expects a broad regional rebound of 9.1% in 2027, provided hostilities cease and maritime traffic through the Strait of Hormuz normalizes early next year.
