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Saudi Arabia Leads Gulf Growth at 3.1%

Economic Counsellor and Director of the Research Department of the International Monetary Fund (IMF) Pierre-Olivier Gourinchas attends a press briefing on the world economic outlook at the IMF in Washington, DC, USA, 14 April 2026. (EPA)
Economic Counsellor and Director of the Research Department of the International Monetary Fund (IMF) Pierre-Olivier Gourinchas attends a press briefing on the world economic outlook at the IMF in Washington, DC, USA, 14 April 2026. (EPA)
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Saudi Arabia Leads Gulf Growth at 3.1%

Economic Counsellor and Director of the Research Department of the International Monetary Fund (IMF) Pierre-Olivier Gourinchas attends a press briefing on the world economic outlook at the IMF in Washington, DC, USA, 14 April 2026. (EPA)
Economic Counsellor and Director of the Research Department of the International Monetary Fund (IMF) Pierre-Olivier Gourinchas attends a press briefing on the world economic outlook at the IMF in Washington, DC, USA, 14 April 2026. (EPA)

The International Monetary Fund cut its 2026 growth forecasts for Gulf economies, citing uneven exposure to energy markets and trade disruptions, as well as differing access to alternative oil export routes.

Saudi Arabia is expected to lead regional growth at about 3.1 percent this year, supported by alternative pipeline capacity, the IMF said. The fund also sharply lowered its 2026 growth forecast for the Middle East and North Africa to 1.1 percent.

The revisions were outlined in the IMF’s World Economic Outlook report, released during the Spring Meetings of the IMF and World Bank in Washington. The fund said the region faces a marked downgrade due to attacks on energy infrastructure and supply chain disruptions.

Qatar was the hardest hit economy in the region. The IMF cut its forecast by 14.7 percentage points from its January outlook and now expects the economy to contract by 8.6 percent this year, reflecting its heavy exposure to the conflict.

Qatar’s Ras Laffan industrial city — the world’s largest liquefied natural gas export facility — has been offline since early March following a missile strike by Iran, triggering a global gas supply shock. The disruption could affect about 17 percent of Qatar’s annual export capacity for up to five years.

Saudi resilience

Saudi Arabia has shown greater resilience. Despite a 1.4 percentage point downgrade from January, growth is still projected at 3.1 percent in 2026.

The Kingdom has benefited from alternative export routes via the Red Sea, allowing it to bypass the closure of the Strait of Hormuz.

Growth is forecast to accelerate to 4.5 percent in 2027, pointing to stronger medium-term prospects. Saudi Arabia has relied on an east-west pipeline to transport oil overland to the Red Sea, ensuring uninterrupted supply to customers despite disruptions to Gulf shipping routes.

The IMF cut the United Arab Emirates’ 2026 growth forecast to 3.1 percent, down 1.9 percentage points, after partial disruptions to gas facilities and the port of Fujairah.

Oman is expected to post the strongest growth among Gulf Cooperation Council countries this year at 3.5 percent, despite a modest 0.5 percentage point downgrade — the smallest revision in the bloc.

Kuwait’s economy is forecast to contract by about 0.6 percent after a sharp 4.5 percentage point downgrade, while Bahrain is also expected to shrink by 0.5 percent following a 3.8 percentage point cut.

Iraq and Iran

Beyond the Gulf, Iraq’s economy is expected to contract by 6.8 percent this year after a steep 10.4 percentage point downgrade, as the war weighs heavily on the country. Crude oil exports fell by more than 81 percent in March.

Iran’s gross domestic product is also projected to contract by 6.1 percent this year, with the IMF cutting its January forecast by 7.2 percentage points.

The IMF said growth across these economies is expected to rebound in 2027, assuming energy production and transport return to normal in the coming months.

However, it warned that this assumption may need to be revisited if the conflict is prolonged and the scale of the damage reassessed.

The fund added that importing countries are also being hit by higher energy and commodity prices, citing Egypt, where growth expectations were cut by 0.5 percentage points to 4.2 percent. 

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Gold Holds Steady, Eyes Fourth Weekly Gain on US-Iran Peace Deal Hopes

Samples of gold displayed in a program affiliated with the Brazilian Federal Police specializing in tracking gold in Brasilia (Reuters)
Samples of gold displayed in a program affiliated with the Brazilian Federal Police specializing in tracking gold in Brasilia (Reuters)
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Gold Holds Steady, Eyes Fourth Weekly Gain on US-Iran Peace Deal Hopes

Samples of gold displayed in a program affiliated with the Brazilian Federal Police specializing in tracking gold in Brasilia (Reuters)
Samples of gold displayed in a program affiliated with the Brazilian Federal Police specializing in tracking gold in Brasilia (Reuters)

Gold held largely steady on Friday and was on track for a fourth straight weekly gain, as hopes for a US-Iran peace deal eased fears of higher inflation and elevated interest rates.

Spot gold eased 0.1% to $4,784.72 per ounce by 0646 GMT, but was up about 1% so far this week. US gold futures for June fell 0.1% to $4,805.20.

A 10-day ceasefire between Lebanon and ‌Israel went ‌into effect on Thursday and US President Donald ‌Trump ⁠said the next meeting between ⁠the United States and Iran may take place over the weekend.

"Investors are now watching closely for concrete progress in US-Iran negotiations. Any progress or extension of the current fragile ceasefire could further calm oil markets and inflation fears, potentially unlocking more upside for gold," said Tim Waterer, chief market analyst at KCM Trade.

The US dollar was headed ⁠for a second weekly drop, making greenback-denominated commodities ‌more affordable for holders of other currencies, Reuters said.

Oil ‌prices fell, easing fears of higher inflation on optimism that the Iran ‌war could be nearing an end.

Concerns that higher energy prices ‌could stoke inflation and keep global interest rates higher for longer have driven down gold prices by more than 8% since the Iran war began in late February.

While gold is considered an inflation hedge, higher interest rates crimp ‌demand for the non-yielding asset.

Traders now see a 27% chance of a 25-basis-point Federal Reserve interest ⁠rate cut in ⁠December. Before the war, there were expectations of two reductions for this year.

Meanwhile, Indian banks have halted gold and silver import orders from overseas suppliers, with tons of the metals stuck at customs as a formal government order has not been issued authorizing bullion imports.

Gold demand in India was modest this week, as high domestic prices weighed on retail purchases ahead of the key Akshaya Tritiya festival weekend, while premiums in China held steady.

Spot silver rose 0.3% to $78.61 per ounce, and was headed for a fourth straight weekly gain.

Platinum fell 0.3% to $2,079.24 and palladium was down 0.5% at $1,542.50. Both the metals were on track for a third straight weekly gain.

Business

IMF: Middle East Faces Pivotal Economic Moment

Azour speaks during a presentation of the Regional Economic Outlook update (AFP)
Azour speaks during a presentation of the Regional Economic Outlook update (AFP)
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IMF: Middle East Faces Pivotal Economic Moment

Azour speaks during a presentation of the Regional Economic Outlook update (AFP)
Azour speaks during a presentation of the Regional Economic Outlook update (AFP)

The International Monetary Fund said the Middle East, North Africa, and Pakistan were facing a pivotal and exceptionally difficult moment in their modern economic history after the war that broke out on Feb. 28, 2026, describing it as a severe and multifaceted shock to one of the world’s most strategically important economic corridors.

The IMF said the conflict was not merely a border crisis but had disrupted “three pillars of stability, energy markets, trade routes, and business confidence,” triggering a global energy shock and weakening supply chains.

Amid these challenges, Saudi Arabia’s economy emerged as a model of resilience, showing what the IMF described as “exceptional sturdiness” that enabled it to absorb the impact of disruptions to the Strait of Hormuz and a decline in regional output, supported by the pillars of Vision 2030, which strengthened fiscal discipline and logistical flexibility.

Jihad Azour, director of the IMF’s Middle East and Central Asia Department, said while presenting an update of the Regional Economic Outlook in Washington, on the sidelines of the IMF and World Bank Spring Meetings, that the war was reshaping the region’s economic outlook.

At the center of the shock was energy, he said, noting that the Strait of Hormuz, “the world’s most critical energy chokepoint, through which roughly one-fifth of global oil supply and about one-quarter of global LNG trade normally transit,” had come close to a standstill.

He said disruptions and shutdowns had cut oil and gas output across Gulf Cooperation Council countries, pushing Brent crude above $100 a barrel, while “European gas prices rose by roughly 60 percent, exceeding the spike observed after Russia’s invasion of Ukraine,” putting global energy security at risk.

He said energy disruptions caused by the war would weigh heavily on Gulf exporters, while oil-importing countries such as Egypt and Jordan were facing higher commodity prices and weaker remittance flows.

More broadly, the Middle East and North Africa region is expected to see a marked slowdown in growth this year, with real GDP projected at about 1.1%, significantly below pre-war forecasts, before a recovery in 2027, according to the IMF.

Azour said the shock extended beyond oil and gas, noting that “commodity disruptions extend beyond oil and gas,” affecting fertilizers, chemicals, and other products in which the region holds a strategic position.

He warned that rising food costs were directly threatening vulnerable populations, saying that “these price increases translate directly into higher food costs for some of the world’s most vulnerable populations,” particularly in import-dependent economies across the region and beyond.

He added that the conflict had also affected services, saying, “air traffic collapsed at major Gulf hubs, maritime insurance premiums surged, shipping routes lengthened, and logistics chains weakened,” highlighting the broad impact on aviation and logistics.

The IMF said some oil-importing economies in the region relied heavily on Gulf countries for energy imports and financial flows, leaving them exposed if the conflict intensified or persisted.

Saudi experience

Azour said one of the most important lessons from the war and the disruption of the Strait of Hormuz was the need to diversify trade routes.

“This shock underscores the importance of building greater resilience and strengthening integration,” he said, adding that this includes “diversifying trade routes and deepening regional cooperation,” to ensure the continued flow of goods and energy.

He said Saudi Arabia’s approach under its strategic vision went beyond infrastructure development to a broader reshaping of logistics networks. By expanding alternative ports on the Red Sea and strengthening land and rail connectivity, the kingdom reduced its reliance on a single maritime chokepoint.

He said this ability to create parallel trade routes allowed Saudi trade to continue effectively despite disruptions to regional corridors, offering a model for protecting economic security and ensuring uninterrupted supply flows.

Egypt

Azour said economic reforms implemented by Egypt, along with stronger policy buffers, were helping the country better manage external shocks.

He said allowing the exchange rate to become more flexible helped absorb shocks, while higher reserves provided reassurance to markets.

Regional divergence

The IMF report highlighted a sharp divergence across countries. Qatar faced a steep downgrade to growth forecasts due to damage to its gas infrastructure, while Oman showed relative resilience given its geographic position outside the Strait of Hormuz.

At the same time, financing pressures increased on Egypt, Pakistan, and Jordan as sovereign spreads widened, prompting Azour to stress that the IMF stood ready to support countries.

He said that if oil production recovered and the Strait of Hormuz fully reopened, countries would be able to increase output quickly, adding that higher oil prices compared with pre-2026 levels would help producers recover some of their losses from the crisis.

Business

Pakistan Central Bank Receives $2 billion from Saudi Arabia as Part of Broader Financial Support Package

Mohammed Al-Jadaan and Muhammad Aurangzeb following the agreement for Saudi Arabia to provide an additional $3 billion in support to Pakistan (X).
Mohammed Al-Jadaan and Muhammad Aurangzeb following the agreement for Saudi Arabia to provide an additional $3 billion in support to Pakistan (X).
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Pakistan Central Bank Receives $2 billion from Saudi Arabia as Part of Broader Financial Support Package

Mohammed Al-Jadaan and Muhammad Aurangzeb following the agreement for Saudi Arabia to provide an additional $3 billion in support to Pakistan (X).
Mohammed Al-Jadaan and Muhammad Aurangzeb following the agreement for Saudi Arabia to provide an additional $3 billion in support to Pakistan (X).

Pakistan announced that it has received $2 billion from Saudi Arabia’s Ministry of Finance as part of a broader financial support package.

Earlier, Pakistan’s Finance Minister, Muhammad Aurangzeb, said that Saudi Arabia had committed to depositing an additional $3 billion, while extending an existing $5 billion loan for three years instead of renewing it annually.

This support comes as Pakistan faces repayment of $3.5 billion to the United Arab Emirates, putting pressure on its reserves, which stand at about $16.4 billion.

Saudi Arabia has a history of assisting Pakistan during economic crises, including a $6 billion support package in 2018 that included deposits and deferred oil payments.