The International Monetary Fund (IMF) has significantly lowered its economic growth projections for several Middle Eastern countries, citing disruptions in energy and trade caused by the US-Israel conflict with Iran. The IMF warned that a prolonged conflict could lead to deeper economic shocks for the region.

In its latest economic outlook released on Thursday, the IMF highlighted that countries reliant on the Strait of Hormuz for energy exports are particularly affected. As vessel traffic through this critical waterway has dropped substantially since the pre-conflict period, these economies are expected to face more severe contractions. Economies with diversified trade routes, however, are demonstrating greater resilience.

Specifically, Qatar, one of the world's largest liquefied natural gas exporters, is now forecast to see its economy shrink by 8.6% this year, a downward revision of nearly 15 percentage points from the October prediction. Iraq and Iran are projected to contract by 6.8% and 6.1%, respectively. Meanwhile, the two major Gulf economies, Saudi Arabia and the United Arab Emirates, are still expected to grow, but their growth rates have been revised down to 3.1%, reflecting reductions of 0.9 and 1.9 percentage points from previous forecasts.

The IMF noted that the closure of the Strait of Hormuz, disruptions to oil and gas production, and restrictions on air travel in the Gulf region have already delivered a direct blow to regional economies. The Director of the IMF's Middle East and Central Asia Department stated that if the conflict persists, the long-term impact on the region's economy will intensify.

This week, the IMF also concurrently downgraded its global economic growth forecast. Under the most optimistic scenario, where the conflict ends relatively quickly and oil prices average around $82 per barrel, global growth is projected at 3.1%. In the most pessimistic scenario, involving increased damage to energy infrastructure, global growth could fall below 2%. The IMF emphasized the high degree of uncertainty stemming from geopolitical shocks, stating it is currently unable to assign clear probabilities to the different scenarios.

The report indicated that while damage to oil and gas production and exports is the primary source of the shock, non-energy sectors such as manufacturing, tourism, and logistics have also suffered significant impacts, further dragging down overall economic activity.

The current conflict began on February 28, triggered by a joint US-Israel operation. Subsequent retaliation by Iran affected key energy infrastructure in Gulf nations, including important assets like Qatar's Ras Laffan liquefied natural gas plant. The IMF assesses that the situation remains fluid, with future developments highly dependent on whether ceasefire agreements hold and regional stability is restored.