The International Monetary Fund (IMF) has sharply cut growth forecasts for the Middle East and Central Asia in 2026, as the ongoing war has sent economies into a tailspin, Reuters reports.

In its latest World Economic Outlook report, the IMF said the regional economy was projected to contract by 0.3 per cent, compared to its projected 1.9 percent growth six months ago.

It cited “a longer closure of the Strait of Hormuz, compared with the baseline assumptions in the April” report, predicting a major rebound in 2027 based on the expected reopening of the waterway.

Since the Middle East war began in late February with US-Israeli strikes on Iran, Tehran has sought to impose its control over the Strait of Hormuz, repeatedly attacking ships that transit without its authorisation.