Shafaq News- Baghdad

The International Monetary Fund (IMF) expects Iraq’s economy to contract by 16% in 2026 before rebounding by 19% in 2027, according to its October 2026 World Economic Outlook, which also projects higher inflation and a widening current account deficit this year.

According to the report’s Middle East and Central Asia economic forecasts, Iraq’s economy contracted by 0.4% in 2025. The IMF projects inflation will rise to 3.5% in 2026 from 0.3% in 2025, before easing to 3% in 2027.

Iraq’s current account deficit is expected to widen to 10.8% of gross domestic product (GDP) in 2026, compared with 3.8% in 2025, before shifting to a surplus of 2.2% of GDP in 2027.

The projections place Iraq among the region’s oil-exporting economies expected to contract this year. The IMF forecasts a combined 3.8% contraction for regional oil exporters in 2026, followed by growth of 7.4% in 2027.

The report also projects economic contractions of 3.3% in Saudi Arabia, 3.9% in the United Arab Emirates, 15.6% in Qatar, and 16.7% in Kuwait in 2026, with all four economies expected to return to growth in 2027.