Roberta Gatti, Chief Economist at the World Bank Group for the Middle East, North Africa, Afghanistan, and Pakistan, confirmed that the ongoing conflicts in the region have left severe economic impacts, represented by massive destruction of infrastructure, the displacement of large numbers of people, and noticeable disruptions in economic performance.
In an interview with Al Arabiya Business, Ghati indicated that the World Bank reduced its expectations for the growth of the region’s economies by almost half, from 4% to about 2%, noting that countries located in the epicenter of conflicts are the most affected compared to others.
She added that the ability of countries to confront economic shocks varies depending on the level of diversification of their economies away from dependence on oil, as well as their ability to export their products away from important waterways, explaining that countries such as Qatar, Kuwait and Iran are considered more vulnerable to being affected due to their heavy dependence on the Strait of Hormuz, while Saudi Arabia was able to reduce risks by diversifying its economy and using the “East-West” pipeline to export its oil.
Ghati explained that the repercussions of conflicts are not limited to the countries participating in them only, but extend to other countries, especially with the rise in oil prices, which leads to an increase in inflation rates, puts pressure on the balance of payments, and is also reflected in food prices as a result of the high cost of energy-related fertilizers, and she expected these pressures to continue until next year.
She pointed out that the greatest impact was not only through prices, but also through oil quantities and export difficulties, which reflects major challenges in managing production and trade, especially with inventory levels reaching their maximum extent in some cases.
In the same context, she explained that oil-importing countries are the most affected when prices rise, as happened after the Russian-Ukrainian war, where they faced pressures on balances of payments and a decline in the value of local currencies, in addition to negative impacts on sectors such as tourism and high levels of risks in financial markets.
She pointed out that the conflicts also led to large waves of displacement, as nearly a fifth of Lebanon’s population was displaced, while about 3 million people from Iran left their homes during the first weeks of the escalation.
She stressed that the continued state of uncertainty and price volatility represent the most prominent challenges at the current stage, stressing the importance of enhancing the ability of economies to withstand by accelerating the pace of reforms and diversifying sources of income, in addition to building financial reserves to absorb shocks.
She welcomed the measures taken at the monetary policy level, expressing her hope that the truce would pave the way towards permanent stability in the region, supported by economic reforms that enhance sustainability and growth.
The World Bank lowered its expectations for the growth of Middle Eastern economies in 2026 as a result of the war between the United States and Israel on the one hand and Iran on the other, and warned in a report published today, Wednesday, of widespread risks.
