IMF's Azour: buffers limited Iran war damage to Gulf economies but are finite

Mixed · 2Jihad Azour, the IMF's director for the Middle East and Central Asia, said on Thursday 15 October that prewar buffers have helped limit the economic impact of the Iran war, but that the region's outlook remains highly uncertain. 1 2 Centre · 1Speaking to reporters at the IMF and World Bank annual meetings, Azour said the impact was "more contained than the scale initially suggested", but that "These buffers bought time but they are finite. Inventories are lower, spare capacity is tighter, and renewed disruption could generate much larger price adjustments." 1 Right · 1In an interview with Asharq Bloomberg, carried by Arab News, he listed six buffers: diversified oil export routes, diversified economic activity, strong financial reserves and liquidity, swift government and central bank intervention, cooperation among Gulf states, and institutional experience from earlier shocks. 2

Centre · 1The National reports that other mitigating factors, according to Azour, were output from non-Gulf producers and an adjustment in energy demand, while the UAE and Saudi Arabia explored alternative routes to market and International Energy Agency members agreed in March to release up to 425 million barrels of reserve stocks. 1 Mixed · 2Azour warned that a prolonged crisis could deplete some of the buffers, and that a more prolonged conflict is the most significant risk, likely to weaken activity, inflame inflation and strain public finances. 2 1 Mixed · 2The IMF projects 2026 contractions of 3.3 per cent for Saudi Arabia, 3.9 per cent for the UAE, 11.3 per cent for Bahrain, 15.6 per cent for Qatar, 16 per cent for Iraq and 16.7 per cent for Kuwait; Arab News adds that Oman is forecast to grow 4.1 per cent. 1 2

Mixed · 2Growth is expected to rebound in 2027, though output will stay below the path projected before the conflict; Arab News reports the IMF expects Saudi GDP to grow 7.9 per cent in 2027. 1 2 Right · 1Azour said Saudi Arabia has shown it can withstand shocks thanks to its reserves and infrastructure investment, which let it redirect oil exports quickly, and that the IMF sees it as better placed than Gulf peers; he said Bahrain's reserves are lower than its peers' and Iraq, reliant on oil exports with limited reserves, needs a comprehensive programme. 2 Mixed · 2On oil importers, Azour said remittances, tourism, easier financial conditions and government support cushioned the shock, but "the room for maneuver in economic policymaking is narrowing". 2 1

Centre · 1The National places the remarks against continuing attacks: Brent crude is 47 per cent above prewar levels (at $106.1 on Wednesday) but below the feared $200; the UK Maritime Trade Operations agency counted at least 12 tankers attacked in and around Hormuz in the past week; and Houthi rebels attacked Saudi Aramco's headquarters, with no casualties reported. 1 Mixed · 2The IMF this week kept its 2026 global growth forecast at 3.1 per cent, nudged 2027 up to 3.4 per cent and raised its 2026 inflation forecast to 4.7 per cent, and Azour urged regional economies to prioritise price stability and rebuild fiscal buffers; he also called for deeper Gulf integration, with the IMF to study its growth effects. 1 2 Centre · 1The IMF will publish its Middle East outlook next week in Dubai. 1