Report: Running on Buffers: The IMF’s October 2026 Outlook and the Second Opinion on the Gulf’s War Year

Report page: summary and downloads →

By The Edge Research Team

The International Monetary Fund expects Egypt’s economy to grow 5.1 percent in 2026 and 4.7 percent in 2027. Its October World Economic Outlook, released on 13 October, also forecasts double-digit 2027 rebounds for Qatar at 18.8 percent, Kuwait at 17.1 percent and Bahrain at 13.9 percent, with Saudi Arabia at 7.9 percent and the UAE at 7.7 percent. World growth is forecast at 3.1 percent this year and 3.4 percent next, unchanged for 2026 from the April outlook and 0.2 point higher for 2027. A companion Global Financial Stability Report, released the same day, names three possible triggers for a sharp tightening of financial conditions: a correction in AI-linked assets, a jump in sovereign bond yields and cyberattacks.

Egypt Runs 2 Points Ahead of World Growth in 2026

Egypt’s growth and GDP figures follow its July to June fiscal year. At 5.1 percent, the 2026 forecast is 2.0 points above the world rate and 1.4 points above the 3.7 percent projected for emerging market and developing economies as a group, on our calculation. It is also the fastest pace in the outlook’s Egypt series since the 6.7 percent recorded for 2022. The 2026 figure is 0.9 point higher than the 4.2 percent the April outlook gave, while the 2027 figure is 0.1 point below April’s 4.8 percent, on our calculation. Compounding the two forecast years, Egypt’s real output would expand 10.0 percent from the 2025 level by 2027, against 6.6 percent for the world economy, on our calculation.

Price pressure keeps easing. Consumer inflation is put at 13.3 percent for 2026, down from 20.4 percent in 2025 and 33.3 percent in 2024, a 20.0-point fall over two years on our calculation, before a rise to 14.8 percent in 2027. In dollar terms, Egypt’s nominal GDP is put at 442.9 billion dollars for 2026 and 486.2 billion dollars for 2027, up from 364.6 billion dollars in 2025; the 2026 step is a 21.5 percent increase on our calculation. The current account deficit is projected at 4.4 percent of GDP in 2026 and 4.9 percent in 2027. Further out, growth is projected at 4.8 percent in 2031.

Qatar, Kuwait and Bahrain Set for Double-Digit Growth in 2027

Oman is forecast to grow 4.1 percent in 2026, the one Gulf Cooperation Council economy with positive growth this year in the outlook, before 2.2 percent in 2027. Saudi Arabia’s 2027 forecast of 7.9 percent is 2.4 points higher than in the July update and 3.4 points higher than in April. On our calculation from the two forecast years, real output in 2027 would stand above its 2025 level in Oman by 6.4 percent, Saudi Arabia by 4.3 percent, the UAE by 3.5 percent, Bahrain by 1.0 percent and Qatar by 0.3 percent, with Kuwait recovering to 97.5 percent of its 2025 level.

For 2026 itself, the forecasts for five of the six are contractions: Kuwait 16.7 percent, Qatar 15.6 percent, Bahrain 11.3 percent, the UAE 3.9 percent and Saudi Arabia 3.3 percent, the Saudi figure 5.0 points lower than in July. The report names Bahrain, Kuwait and Qatar among the commodity producers most affected by disruptions to energy output and transport, and expects double-digit expansions in 2027 as their production, exports and logistics normalise. It describes Saudi Arabia as somewhat less affected, as an economy with “more diversified export routes”. For the Middle East and Central Asia region, growth is projected at minus 0.3 percent in 2026 and 6.3 percent in 2027, the second figure 1.7 points above the April forecast. The outlook links that revision to its assumption of a longer closure of the Strait of Hormuz than in the April baseline and a correspondingly larger rebound once the Strait reopens.

Real GDP growth forecasts, with 2027 rebounds in five Gulf economies (%)

Annual percent change, World Economic Outlook, October 2026; 2026 and 2027 are projections. Egypt’s national accounts follow its July to June fiscal year. Economies ranked by 2027 growth.

Measured in dollars at current prices, the picture is firmer. The combined GDP of the six Gulf economies rises 4.2 percent in 2026 and stands 12.7 percent above its 2025 level in 2027, on our calculation, and Saudi Arabia alone accounts for 53.3 percent of the 2026 total. The outlook assumes an average oil price, based on futures markets, of 95.74 dollars a barrel in 2026, 41.3 percent above the 67.74 dollars of 2025, easing to 87.39 dollars in 2027.

Gulf nominal GDP set to reach 2.73 trillion dollars in 2027 ($ billion)

GDP at current prices in billions of US dollars, World Economic Outlook, October 2026. The total is our calculation from the country figures before rounding, so the rounded rows may not add exactly to it.

Kuwait and Qatar keep large external surpluses. Kuwait’s current account surplus is projected at 18.3 percent of GDP in 2026, equal to 26.9 billion dollars on our calculation, widening to 24.9 percent in 2027. Qatar’s surplus is put at 7.1 percent of GDP, rising to 13.7 percent, and Oman moves from a deficit of 1.1 percent of GDP in 2025 to a surplus of 5.0 percent in 2026. Inflation in all six Gulf economies is forecast below the 4.7 percent world rate in 2026, from 1.9 percent in Saudi Arabia, 2.8 points under the world figure, to 4.5 percent in the UAE.

Current account surpluses in five Gulf economies, with inflation under the world rate, 2026 (%)

World Economic Outlook, October 2026, figures for 2026; inflation is the annual average change in consumer prices. World inflation is projected at 4.7 percent.

World Growth Slows to 3.1 Percent as Inflation Rises to 4.7 Percent

Global growth slows from 3.5 percent in 2025 to 3.1 percent in 2026, 0.1 point above the July update, before picking up to 3.4 percent in 2027. Advanced economies are projected at 2.1 percent and 1.8 percent, and emerging market and developing economies at 3.7 percent and 4.4 percent. The United States grows 2.3 percent in both years, China 4.5 percent and then 4.0 percent, and India, on a fiscal year basis, 7.0 percent in both. World trade volume rises 4.6 percent in 2026 and 4.7 percent in 2027.

Headline inflation is the weaker part of the forecast. World consumer prices are projected to rise 4.7 percent in 2026, reflecting mainly higher commodity prices, and 4.1 percent in 2027, the 2027 figure 0.4 point above the April forecast. Core inflation is put at 3.9 percent and 3.7 percent. The report judges the risks to be tilted to the downside, naming a reassessment of expectations around artificial intelligence, renewed trade tensions and fiscal vulnerabilities, while stronger AI investment and productivity gains, or a sustained easing of trade tensions, could lift growth. It asks governments to rebuild fiscal space and central banks to stay focused on price stability. Its second chapter finds that measures which suppress prices can require 3 to 22 times more fiscal resources than targeted, temporary transfers. The projections use data available through 1 October 2026.

Three Triggers in the Financial Stability Report

The IMF’s stability report finds financial markets resilient, supported by solid growth and strong corporate earnings, but judges stability risks to remain elevated. The first trigger is a correction in AI-related asset prices if investment and profitability in the sector prove weaker or less durable: a review of 14 circular financing deals in the AI sector since 2023 found an estimated 300 billion dollars of equity and 650 billion dollars of debt exchanged for 1.4 trillion dollars of future revenue commitments, so the commitments are 1.5 times the 950 billion dollars of financing, on our calculation. The second is a sharp rise in sovereign bond yields driven by renewed inflation or fiscal concerns, which could also reduce the value of bonds used as collateral. The third is cyberattacks: in more than 70 percent of cases reported so far this year, software providers had almost no time to patch a weakness before it was exploited, more than double the share in 2021.

Under the adverse stress scenario, banks holding 22 percent of global banking assets would end with capital ratios below regulatory limits, up from 18 percent a year earlier, a 4-point rise on our calculation, although the global banking system remains broadly resilient. The report also points to liquidity mismatches at insurers and pension funds, leverage in private credit, and hedge funds, whose assets have grown to an estimated 13 trillion dollars, more than three times their 2013 level. Some emerging markets have seen their policy buffers erode.

Why it matters: The October forecasts are the multilateral baseline for Egypt and the Gulf through 2027. For Egypt, growth of 5.1 percent and 4.7 percent keeps the economy ahead of the world and emerging market averages while inflation runs well below its 2024 rate. For the Gulf, the 2027 path leaves real output above 2025 levels in five of the six economies, combined dollar GDP rises in both forecast years, and current account surpluses widen in 2027 in Kuwait and Qatar.

Outlook: The 2027 rebound rests on production, exports and logistics normalising, with the assumed average oil price easing to 87.39 dollars a barrel in 2027. The forecasts extend the recovery into 2028, with Kuwait at 11.5 percent, Qatar at 11.1 percent and the UAE at 7.0 percent, while Egypt is projected to grow 5.0 percent in 2028.

Sources: International Monetary Fund, The Edge.

Download the full report
⬇ Download the report in English
⬇ تحميل التقرير بالعربية

Get Complimentary Insights

Follow us