In a globalized world, a war that disrupts a vital maritime chokepoint affects the economic performance of more or less every country. However, economic forecasts indicate that some economies rebound more than others, signalling greater resilience and resource utilization in such economies.
The US-Israel War on Iran and its impact on the economies of the Middle East and North Africa (MENA) region illustrates these dynamics. On July 8, 2026, the International Monetary Fund (IMF) published its World Economic Outlook report containing projections related to 2027. Notably, what stood out in the report was that after the war ends, the economies of the MENA region are projected to rebound and grow at a rate of 7.3% in 2027 compared to the 3.4% overall growth rate of economies around the world. The MENA region is also projected to grow at the fastest rate around the world.
This projected aggressive growth for the MENA region comes in the backdrop of the US-Israel War on Iran. During the war, Iran created disruptions to the Strait of Hormuz — a vital maritime trade chokepoint that, under normal conditions, accounts for approximately 20% of global oil exports. This sent economic shockwaves around the world, and oil prices averaged $89 per barrel in 2026. Thus, the IMF’s July 8 report projected global economic growth at a rate of 3.0% in 2026, a 0.5% drop from the average of 2024-2025. For the MENA specifically, the region was projected to contract by 0.5% in 2026. The IMF stated that these projections are based on the most probable assumption of continued disruptions to the Strait of Hormuz in 2026, while the rebound predictions are attributed to a corresponding ease of disruptions to the strait.
This ease of disruption to the Strait of Hormuz and corresponding rebound would have significant implications for the MENA region. It would create fiscal space for restoration in the Gulf region. After the easing of disruption to the Strait and the subsequent projected economic rebound, hydrocarbon revenues are expected to increase. This would allow the GCC states to redirect resources towards rebuilding depleted fiscal space, as the overall regional economic loss from the conflict is estimated at approximately $194 billion. Furthermore, economies with more diversified export routes, like Saudi Arabia, are expected to experience stronger gains during the 2027 period, with the country’s growth forecast at 5.5%.
Apart from these implications for the MENA region, the world would also be profoundly impacted by this rebound if it materializes as projected. The projected growth rate of 7.3% in the region would be accompanied by eased critical energy and supply chain disruptions. This would create downward pressure on energy prices. Eventually, as projected by the IMF, due to regional stabilization, global headline inflation would ease to 3.9% in 2027 from a heated 4.7% in 2026.
Ultimately, the IMF’s 2027 optimistic outlook for the MENA region would be beneficial for both the region and the world. However, crucially, the dynamics of the war between the US and Iran and the normalization of maritime trade traffic through the Strait of Hormuz would be the ultimate deciding factors for the 2027 economic outlook of the MENA region.