The International Monetary Fund (IMF) has warned that the ongoing Middle East conflict is expected to slow economic growth across the MENAP region in 2026, creating risks for countries including Pakistan.

The MENAP region — Middle East, North Africa, Afghanistan, and Pakistan serves as a key economic corridor linking three continents.

The warning was issued by Dr Mahir Binici while addressing a session at the Sustainable Development Policy Institute (SDPI), where he presented the IMF’s Regional Economic Outlook for April 2026.

Dr Binici stated that the war, which began on February 28, has triggered a multi-dimensional economic shock, affecting energy markets, trade routes, and financial conditions.

He pointed out that the impact has disrupted supply chains, increased food and fertiliser prices, and slowed economic activity across the region, adding that risks of further decline remain in place.

He noted that oil-importing countries such as Pakistan face added pressure, as the conflict is compounding existing economic challenges.

He admitted that Pakistan’s performance under the IMF’s Extended Fund Facility programme remains “on track”.

Outlining policy priorities, Dr Binici stressed that maintaining economic stability requires fiscal discipline, tight and data-based monetary policy, and continuity in structural reforms.

He urged the government to avoid untargeted subsidies and instead adopt targeted and temporary measures to support vulnerable groups while strengthening fiscal and external buffers.

He also called for diversification of trade routes, investment in infrastructure, greater regional cooperation, and private sector-led growth.

Dr Binici said that continuing reforms is necessary for Pakistan to respond to changing regional and global conditions while maintaining macroeconomic stability.

Earlier, Dr Abid Qaiyum Suleri, Executive Director of SDPI, said that the session was held to assess the impact of shifting regional and global conditions on Pakistan’s economy.

He stated that the next tranche under the IMF programme depends on approval by the Fund’s Executive Board.

Dr Suleri also referred to the need for reforms in the energy sector, including negotiations related to capacity payments, and highlighted the need to increase the share of renewable energy.

“Pakistan must improve its preparedness to deal with external economic shocks through timely and targeted policy responses,” he said.