The International Monetary Fund has downgraded its 2025 economic growth projections for oil-exporting countries in the Middle East and North Africa (MENA), including Saudi Arabia and Iraq, amid rising global trade tensions and weakening oil prices.
In its latest regional economic outlook released Thursday, the Washington-based institution cut its growth forecast for oil exporters in the region to 2.3%—a sharp 1.7 percentage point drop from its previous estimate in October.
The IMF now expects Brent crude oil prices to average $66.9 per barrel this year, almost $6 lower than the prior forecast. The revision comes in response to robust output growth from non-OPEC+ countries and weakening global demand as the broader economy slows. Brent prices have fallen roughly 15% this year to about $63 a barrel, weighed down by ongoing trade disputes—particularly those involving the U.S.—and OPEC+’s faster-than-anticipated production increases.
Iraq was among the hardest-hit in the updated outlook. The IMF now predicts a 1.5% contraction in Iraq’s gross domestic product this year, a dramatic reversal from the 4.1% growth anticipated in October. Saudi Arabia’s projected growth was also revised downward, from 4.6% to 3%.
Although Gulf countries continue to push forward with infrastructure investments and economic diversification, the IMF cautioned that some governments may reduce spending in response to softer crude prices. “There’s been a recalibration of investment spending plans resulting from softer oil prices, further amplified by the decline in oil prices from the recent escalation of trade tensions,” the report said.
However, the IMF noted that the direct effects of tariffs on Gulf Cooperation Council (GCC) countries remain limited due to energy export exemptions and their relatively small volume of non-oil exports to the U.S.
Overall, the IMF expects the broader MENA region to grow by 2.6% in 2025—down 1.4 percentage points from its October projection.
