World Bank Slashes 2026 Middle East Growth Forecast, Saudi Arabia Absorbs Shock

A cargo ship in the Arabian Gulf near the Strait of Hormuz (Reuters)
A cargo ship in the Arabian Gulf near the Strait of Hormuz (Reuters)
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World Bank Slashes 2026 Middle East Growth Forecast, Saudi Arabia Absorbs Shock

A cargo ship in the Arabian Gulf near the Strait of Hormuz (Reuters)
A cargo ship in the Arabian Gulf near the Strait of Hormuz (Reuters)

The World Bank has slashed its 2026 growth forecast for Middle East economies, saying overall GDP growth in ⁠the region is expected to slow from an estimated 3.6% in January to 1.8% for 2026.

The closure of the strategic ⁠Strait of Hormuz, and destruction ⁠of energy and public infrastructure, had disrupted markets, increased financial volatility, and weakened the 2026 growth outlook, the World Bank Group said in its Economic Update for the Middle East, North Africa, Afghanistan and Pakistan.

The report was published as US President Donald Trump late on Tuesday announced a two-week ceasefire in the conflict with Iran after he had threatened to wipe out “a whole civilization.”

According to the World Bank, the conflict comes as an additional shock to a region already suffering from low productivity growth, limited private sector dynamism and persistent labor market challenges – underscoring the urgent need to strengthen governance and macroeconomic fundamentals and take action to boost long-term job creation and resilience.

The April 2026 World Bank’s Macro Poverty Outlook forecasts that the region’s aggregate (excluding the Iran) GDP growth will decelerate to 1.8 percent in 2026, down from 4.0 percent estimated for 2025. The 2026 forecast has been downgraded by 2.4 percentage points since the January projections, reflecting the adverse effects of the ongoing conflict.

GCC states

Growth in the Gulf Cooperation Council and Iraq, among the most heavily affected by the impact of the conflict, is expected to slow to 1.3% for 2026, down 3.1 percentage points from its January projection, and driven mainly by lower projected hydrocarbon revenues due to disruptions caused ⁠by the ⁠conflict.

Saudi Arabia: Forecast was downgraded by 1.2 percentage points since January. Growth is now expected to slow from 4.3% in 2025 to 3.1% in 2026, noting that Saudi Arabia’s outlook remains the strongest among Gulf economies.

United Arab Emirates: Growth forecast for the UAE has fallen by 2.7 percentage points since January. Growth is now expected to slow from 5% in 2025 to 2.4% in 2026.

Qatar: Notably, growth forecast for the Qatari economy has seen a sharp decline of 11.0 percentage points since January. The economy is now expected to record a contraction of 5.7%, down from an estimated growth of 5.3%, due to severe obstruction to liquefied gas supplies. Qatar is a key player in the global energy market, with a global market share of liquefied natural gas (LNG) supplies ranging between 20% and 21%.

Kuwait: Likewise, Kuwait’s economy is expected to register a significant contraction of 6.4%, compared to growth of 2.6% expected in January. Kuwait relies entirely (100%) on the Strait of Hormuz to export its crude oil and derivatives. Consequently, closing the strait would mean a complete shutdown of the country’s financial lifeline, immediately halting revenue inflows to the state budget.

Bahrain: Growth forecast for Bahrain’s economy has declined by 1.8 percentage points since January. Growth is now expected to slow from 3.1% in 2025 to 1.3% in 2026.

Sultanate of Oman: Growth forecast for Oman’s economy has decreased by 1.2 percentage points since January. Growth is now expected to slow from 3.6% in 2025 to 2.4% in 2026.
Iraq

The greatest shock in the World Bank report lies in the free fall of the Iraqi economy, as its growth forecast dropped from 6.5 percent to a staggering contraction of 8.6 percent.

This alarming figure reflects the situation faced by Iraq following the closure of the Strait of Hormuz.

Iraq — the second-largest producer within the Organization of the Petroleum Exporting Countries (OPEC) — experienced the largest drop in production, estimated at nearly 70 percent, dropping to about 800,000 barrels per day from 4.3 million barrels prior to the Strait of Hormuz crisis.

Egypt

Egypt’s situation in the World Bank report differs from that of some countries in the region that saw sharp contractions; the bank maintained its forecast for Egypt’s economic growth at 4.3%.

The World Bank said that “risks are tilted to the downside.”

It added that “in the event of a prolonged conflict, the current impacts on the region will be compounded–through elevated energy and food prices, declining trade, tourism and remittances, increased fiscal pressures, and displacement.”

Peace is a precondition for the region’s durable development

“The current crisis is a stark reminder of the work ahead for the region: not only to weather shocks, but to rebuild more resilient economies with stronger macroeconomic fundamentals, innovate and improve governance, invest in infrastructure, and boost employment-creating sectors,” Ousmane Dione, the World Bank's Vice President for the region said in a statement.

"Peace and stability are preconditions for the region’s durable development. With peace and the right action, countries can build the institutions, capabilities and competitive sectors that create opportunities for people,” he added.

As for Roberta Gatti, World Bank Group Chief Economist for the Middle East, North Africa, Afghanistan and Pakistan, she said: "As countries face the heavy toll of the present conflict, it is important to also not lose sight of the work needed for long-lasting peace and prosperity.”



China, US Discuss Tariffs, Farm Trade at First Trade Council Meeting

US and Chinese flags are seen in this illustration taken March 20, 2025. (Reuters)
US and Chinese flags are seen in this illustration taken March 20, 2025. (Reuters)
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China, US Discuss Tariffs, Farm Trade at First Trade Council Meeting

US and Chinese flags are seen in this illustration taken March 20, 2025. (Reuters)
US and Chinese flags are seen in this illustration taken March 20, 2025. (Reuters)

China and the United States held their first trade council meeting under a bilateral economic and trade consultation mechanism via ‌video link ‌on Friday, China's ‌commerce ⁠ministry said on ⁠Saturday.

The two sides held "candid, in-depth and constructive discussions" on implementing outcomes ⁠from previous trade consultations, ‌including ‌tariffs, a reciprocal ‌tariff-reduction arrangement involving $30 ‌billion on each side, agricultural trade and other issues of ‌note, the ministry said.

Both sides will ⁠continue ⁠to use the council to address trade concerns, expand cooperation and reduce outstanding issues, it added.


IMF Says More Work Needed on Lebanon Reforms

A man walks past Lebanon's Central Bank headquarters in Beirut on November 10, 2026. (AFP)
A man walks past Lebanon's Central Bank headquarters in Beirut on November 10, 2026. (AFP)
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IMF Says More Work Needed on Lebanon Reforms

A man walks past Lebanon's Central Bank headquarters in Beirut on November 10, 2026. (AFP)
A man walks past Lebanon's Central Bank headquarters in Beirut on November 10, 2026. (AFP)

The International Monetary Fund said on Friday that more work was needed to reach an agreement on restructuring Lebanon's banking sector, one of the steps towards unlocking billions of dollars in financial assistance.

An IMF staff-level agreement reached in April 2022 laid out conditions to unlock assistance, including a law on the distribution of losses in the banking sector, known as the financial gap law, which parliament has still not voted on.

In a statement at the end of meetings that began on Tuesday, the IMF said "there was progress in further clarifying the approaches under consideration by the Banque du Liban (BdL) and the Government regarding banking sector reform, the draft financial regulation law and the recovery of deposits, and aligning them with international standards".

It however noted that "further work is needed to reach an agreement on a strategy for an effective and durable restructuring of Lebanon's banking sector, leading to a sound and resilient system".

The cabinet submitted a draft of the law to parliament in 2025, but the text is contested by the banking sector and political parties, preventing a vote.

Differences over estimates of losses and their distribution have stalled negotiations with the IMF.

In 2022, the government estimated losses resulting from the 2019 financial crisis at around $70 billion, a figure believed to have increased over the last seven years during which the crisis has remained unresolved.

Lebanese Finance Minister Yassin Jaber said during a news conference that he hoped to "achieve progress that would allow us to reach an agreement on a program with the IMF and sign it during the first quarter of next year, and by its end at the latest".

Lebanon's economic crisis, which the World Bank has ranked among the worst since 1850, has deprived depositors of access to all of their funds, destroyed confidence in the banking sector and led to greater reliance on cash liquidity in various economic and commercial activities.


Silver Demand Seen Down 5% This Year Due to Weaker Jewellery Purchases

Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
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Silver Demand Seen Down 5% This Year Due to Weaker Jewellery Purchases

Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)
Silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. (Reuters)

Silver demand is expected to fall by 5% in 2026 due to weaker jewellery demand and lower consumption in solar cells, where high prices have accelerated substitution, research showed on Friday.

Research done by consultancy Metals Focus for the Silver Institute puts demand at 1.08 billion troy ounces this year.

Silver, used in jewellery, electronics, electric vehicles and solar panels as well as for investment, is ‌down 59% ‌to $50 an ounce since retail buying drove prices ‌to ⁠a record high ⁠of $121.6 in January.

The base for that rally was created in 2025, when silver surged 147%, as massive inflows of the metal to US inventories due to tariff uncertainty and into silver-backed exchange-traded products (ETPs) tightened liquidity in the London market.

This year, expectations for higher interest rates, a stronger dollar and higher bond yields have weighed on investment ⁠sentiment.

Silver released through ETP selling, outflows from stocks ‌in the US and a smaller ‌market deficit improved liquidity in the physical market, the Silver Institute and ‌consultancy Metals Focus said on Friday.

Metals Focus sees net ETP ‌outflows of 45 million ounces this year after 278 million ounces of inflows in 2025.

As of early November, ETP holdings stood at 1.25 billion ounces.

Industrial demand is expected to fall by 3% in 2026 as installations ‌in photovoltaics have fallen short of expectations, particularly in China, while January's record silver prices accelerated ⁠substitution.

Meanwhile, demand ⁠for jewellery and silverware is forecast to decline by 22% and 17%, respectively, as higher prices and weaker rural spending in India encouraged purchases of smaller, lighter products.

Demand in China and the US is also subdued. Strong retail investment in late 2025 and early 2026 gave way to far more subdued buying from March as silver prices fell, Metals Focus said.

It expects global bar and coin demand to fall 2% this year, with US retail investment hitting its lowest level since 2010.