War in the Middle East is deepening global inequality, IMF says

International Monetary Fund also points to destabilising impact of AI, as economic leaders meet in Bangkok Children pose for a photo in a makeshift camp for people displaced by clashes between Iran-aligned Houthi fighters and Saudi-backed Yemeni government forces, near Aden, Yemen, 7 October 2026 (Reuters) Published date: 13 October 2026 12:24 BST | Last update: 8 sec ago Wars across the Middle East are deepening global inequality, the International Monetary Fund warned on Tuesday. Conflict in the Gulf, the war on Iran and Israel’s genocide in Gaza are all contributing to the growing divide between economic winners and losers, the IMF said as it released its World Economic Outlook in Bangkok. Climate change, high energy prices and rapid technological disruption - particularly from the rise of Artificial Intelligence - are other drivers of growing instability. Kristalina Georgieva, the IMF’s managing director, said the fund estimates that over time AI could lead to 40 percent of jobs being augmented, downgraded or eliminated. Poorer and developing nations will be most affected by these different causes of instability because they lack the resources to compete for limited supplies with richer countries. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters “What’s happening is that every country has now suddenly figured out that energy security is national security,” said Ajay Banga, president of the World Bank, in Bangkok, where financial officials from around the world have gathered this week for meetings. In the Middle East, Bahrain, Iraq, Kuwait and Qatar have all had their oil and gas exports interrupted because of the war on Iran and are expected to suffer double-digit drips in their total output this year, the fund said. The forecast for Saudi Arabia, which was completed before recent attacks on Riyadh airport and elsewhere, estimated that the kingdom’s economy, which is more diversified, would shrink by 3.3 percent this year before growing 7.9 percent in 2027. This week’s Houthi attacks will complicate this picture, with Saudi Arabia’s move towards growing tourism in the kingdom under threat. Expatriate residents of Riyadh have told Middle East Eye that there are some among them who do not feel the Saudi kingdom is safe anymore. Global instability As well as wars across the Middle East, Russia’s war in Ukraine and US President Donald Trump’s imposition of large tariffs are cited by the IMF as being causes of economic instability. The resilience of the world economy is built on illusion - it's time the West woke up Read More » Banga told Reuters that while global growth had held up better than feared when Iran closed the Strait of Hormuz, shutting off some 20 percent of the world's oil, pressures were building again. Soaring prices for diesel, rising fertiliser prices and a looming “super” El Nino weather effect that experts say could lead to 450,000 heat-related deaths are all hitting at once. “A prolonged conflict in the Middle East could put additional pressures on inflation and slow down growth,” said Silvana Tenreyro, the IMF’s chief economist. “The economy has been resilient, but that resilience is reaching its limits.” The IMF forecast global growth as 3.1 percent this year and 3.4 percent for 2027, but the fund said this “masks a reallocation of growth across economies”. Countries, particularly low-income ones, that are dependent on oil imports and lack competitive tech-related sectors face an increased risk “that recent shocks will widen income gaps across and within countries”. The IMF estimates that inflation will increase to 4.7 percent this year and 4.1 percent next year, with more and more households struggling to pay high energy bills. Middle East Eye delivers independent and unrivalled coverage and analysis of the Middle East, North Africa and beyond. To learn more about republishing this content and the associated fees, please fill out this form. More about MEE can be found here.