The IMF cuts its 2026 growth forecasts across the Gulf

The IMF has downgraded its 2026 growth forecasts across the Gulf. It now expects the Middle East and North Africa to be the only region worldwide that shrinks this year. That is a major reversal from April, when the fund still forecast growth for Saudi Arabia and the UAE.

The cuts are not equal across Gulf economies. Saudi Arabia and the UAE are expected to perform better than Kuwait, Bahrain, and Qatar. Their advantage comes from being able to move crude through alternative routes around the Strait of Hormuz, reducing their exposure to the disruption.

Oman is the only Gulf economy still expected to grow in 2026 because its ports sit outside the strait. The IMF expects a strong rebound next year, but only if the waterway gradually reopens from March. It has already delayed that reopening date, increasing uncertainty about the recovery.

The Strait of Hormuz is a narrow waterway at the entrance to the Gulf, connecting it with the Gulf of Oman and the wider ocean. This geographic position makes it a crucial exit route for oil shipped from several Gulf countries. The article presents its reopening as central to the region’s economic recovery.

Its importance comes from concentration. When crude normally moves through one strategic passage, a closure or disruption can interrupt exports, government income, and economic activity. Saudi Arabia and the UAE are better protected because they can pipe crude around the strait to the Red Sea and Fujairah. Kuwait, Bahrain, and Qatar have fewer alternatives identified in the article.

The disruption is already affecting forecasts. Qatar’s government revenue fell 42% in the first half of the year. The IMF expects a strong rebound next year only if the strait gradually reopens from March, a timetable it has already pushed back.

Qatar’s government revenue was down 42% in the first half of the year, according to the country’s emir. This is the clearest figure in the article showing the disruption’s financial cost. It means the government had substantially less income available during the period than it otherwise expected.

The fall also illustrates the mechanism connecting shipping problems to national finances. Gulf governments depend heavily on revenue linked to crude exports. When shipments are interrupted or routes become harder to use, the state can receive less export income. That pressure can weaken budgets even before broader economic effects appear.

Qatar is grouped with Kuwait and Bahrain as economies expected to perform worse than Saudi Arabia and the UAE. Unlike those two larger Gulf economies, Qatar is not identified as having an alternative crude route around the strait. The IMF still expects a rebound next year, but its timing depends on reopening.

Saudi Arabia and the UAE are expected to perform better because they have alternative ways to move crude when the Strait of Hormuz is disrupted. The article specifically says they can pipe oil around the strait. This reduces their dependence on the threatened waterway and helps protect export activity.

The key mechanism is access to different destinations. Saudi Arabia can move crude toward the Red Sea, while the UAE can use Fujairah, whose ports sit outside the strait. These routes allow at least some oil shipments to continue even when the main passage is unavailable. Continued exports can support government revenue and economic growth.

Kuwait, Bahrain, and Qatar are expected to do worse by comparison. The article does not identify equivalent alternative routes for them. Qatar’s 42% revenue decline shows the possible cost. The IMF expects a strong rebound next year, but only if the strait gradually reopens from March.

If the Strait of Hormuz stays closed, or reopens later than expected, Gulf economies could face a longer period of weak growth or contraction. Crude shipments would remain disrupted, limiting export income and reducing government revenue. The IMF already expects the Middle East and North Africa to shrink in 2026.

The timing of reopening matters because the IMF’s projected rebound next year has a condition. The strait must gradually reopen from March. A later reopening would extend the disruption and postpone the return of normal oil flows. Qatar’s 42% revenue decline in the first half shows how quickly public finances can suffer.

The effects would differ across countries. Saudi Arabia and the UAE have alternative routes to the Red Sea and Fujairah. Oman is also relatively insulated because its ports sit outside the strait. Kuwait, Bahrain, and Qatar face greater pressure, although the IMF expects them to rebound strongly next year if access returns.

The article names two ways to move crude around the Strait of Hormuz. Saudi Arabia can pipe oil toward the Red Sea. The UAE can send crude to Fujairah, whose ports lie outside the strait. Both options reduce dependence on the disrupted passage.

These routes matter because they keep some export flows possible when the main waterway is blocked. Continued movement of crude can protect national income and support economic activity. This is why the article expects Saudi Arabia and the UAE to perform better than Kuwait, Bahrain, and Qatar during the disruption.

The article does not identify comparable alternative routes for Kuwait, Bahrain, or Qatar. It separately notes that Oman’s ports sit outside the strait, making Oman the only Gulf economy still expected to grow in 2026. The IMF’s broader recovery forecast still depends on the strait gradually reopening from March.

Countries that rely heavily on crude exports are vulnerable because oil sales support both economic activity and government revenue. If shipments stop, the country may lose export income immediately. That can reduce public spending, weaken business activity, and lower overall growth. This general economic relationship explains the forecasts in the article.

The mechanism is especially strong when exports depend on one major route. A disruption at that route can prevent crude from reaching buyers, even if oil remains available underground. Alternative pipelines or ports reduce the risk, but countries without them face greater pressure. Qatar’s 42% government revenue decline demonstrates the speed of the impact.

The Gulf forecasts show the uneven result. Saudi Arabia and the UAE can route crude around the Strait of Hormuz, while Oman’s ports sit outside it. Kuwait, Bahrain, and Qatar are more exposed. The IMF expects a rebound next year, but only if the strait gradually reopens.