The Middle East, North Africa, Afghanistan, and Pakistan region is where the conflict's damage is most direct and most severe. Growth across MNA is expected to fall to 1.6 percent in 2026 from 4 percent in 2025 — a downgrade of 2.7 percentage points from January projections. Among the Gulf hydrocarbon exporters, the picture is starker: growth slows to just 0.3 percent. Iraq, Kuwait, and Qatar face the sharpest contractions, with Iraq's forecast cut by more than 15 percentage points from January. Damaged energy infrastructure, near-cessation of Strait of Hormuz shipping, and rising defense expenditures are all eating into fiscal and current account positions. Saudi Arabia and Oman fare somewhat better — Riyadh can partially reroute oil exports through the East-West pipeline, and Oman's major ports sit outside the Strait.
For hydrocarbon importers within the region — Egypt, Pakistan, Morocco, Jordan — the damage comes through higher import bills, weaker remittances from GCC workers, and disrupted tourism. Algeria and Libya are the outliers, receiving modest upgrades because they sit outside the conflict zone and benefit from elevated energy prices. Recovery across MNA, projected to average 4.5 percent in 2027–28, is entirely conditional on the conflict winding down and hydrocarbon production resuming. In West Bank and Gaza, where the October 2025 ceasefire offered a fragile window, near-total destruction of physical infrastructure means the recovery path is longer and more uncertain than any forecast number conveys.
South Asia is the one region where the 2026 growth projection has actually been revised upward since January, though only marginally. The region is expected to grow 6.3 percent this year, driven by India's continued resilience. Domestic demand in India has held up — rural consumption is strong, urban demand is recovering, and tax revenues are rising steadily. A reduction in fuel taxes and GST rate cuts are providing some cushion against the energy shock. India's growth is projected at 6.6 percent for fiscal year 2026/27, moderating slightly before rebounding above 7 percent in the following two years.
The rest of South Asia faces a harder path. Bangladesh and Nepal are dealing with weaker investor sentiment and fragile financial sectors. Bhutan and Maldives are losing tourism revenue and paying more for energy imports. Poverty reduction across the region is still expected to continue, but more slowly than January forecasts anticipated.
Sub-Saharan Africa entered 2026 on relatively firm footing. Growth reached 4.1 percent in 2025, supported by high commodity prices, currency appreciation in several economies, and genuine progress on structural reforms. That momentum is now being tested. Growth is projected to slip to 4 percent in 2026, with the conflict's main transmission channels being higher fuel and fertilizer costs rather than direct trade exposure to the Middle East.
Oil exporters like Angola and Nigeria benefit from the price environment. Everyone else faces higher production costs and rising food prices. Fiscal space across most of SSA is thin — ODA fell 23 percent in 2025 — and expanding fuel subsidies to protect households is adding to deficits that governments can ill afford. The Ebola outbreak in eastern DRC and Uganda, now the third-largest on record, is an added strain on health systems and public finances at the worst possible time.
Per capita GDP growth in SSA is projected at just 1.6 percent in 2026 — not enough to meaningfully reduce poverty in a region where extreme poverty affects a large share of the population, and where SSA's labor force is projected to be the world's fastest-growing by 2030.
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Written By Samyak Naik
