IMF: Iraq among the economies most affected by regional turmoil in 2026

A report issued by the International Monetary Fund showed that Iraq will be among the economies most affected by regional turmoil during 2026, with clear repercussions on inflation rates, external accounts and public finances.

According to the report, which was reviewed by Shafaq News Agency, Iraq is among a limited group of countries facing double pressures as a result of the disruption of trade and the rise in transportation costs, in addition to the effects of armed confrontations on trade routes, especially those related to the Strait of Hormuz, which has led to a noticeable decline in current account and financial balance indicators compared to previous expectations.

The IMF noted that Iraq and Iran experienced the greatest negative pressures on their external and fiscal accounts among the affected countries in the region, as trade losses and declining economic activity outweighed any potential gains from higher oil prices, leading to downward revisions in fiscal performance for 2026.

On the inflation side, the report explained that Iraq witnessed an increase in expectations within the Gulf Cooperation Council (GCC) countries, driven by increased import costs and higher commodity prices, with increases in the region ranging from moderate levels in Iraq and some GCC countries to higher levels in Iran.

According to the IMF, these developments reflect the sensitivity of the Iraqi economy to regional turmoil, particularly with regard to supply chains and foreign trade costs, in addition to the country’s reliance on vital transport routes that pass through geopolitical hotspots.

The report also predicted that pressure on Iraq’s economic indicators would continue in the coming period, unless there is a breakthrough in the regional trade environment and an improvement in the conditions of economic and financial stability.

Shafaq.com