IMF Expert Jihad Azour on Historic Oil Shock and Gulf's Path to Economic Resilience

The ongoing conflict with Iran has triggered the most severe oil and gas shock in modern history, surpassing the impacts of the 1974 crisis and both Gulf Wars. Despite the magnitude of this event, its effect on global prices and markets has been notably less severe than in previous instances, according to the International Monetary Fund (IMF). Jihad Azour, director of the IMF’s Middle East and Central Asia department, attributes this resilience to sustained efforts in economic diversification and the implementation of robust policy frameworks across the Gulf Cooperation Council (GCC) countries.

The IMF's latest regional economic outlook projects an economic contraction for the current year, anticipating a strong recovery in 2027. In an interview for Business Extra, Mr. Azour spoke with The National's Editor in Chief, Mina Al-Oraibi, to discuss the varied impact of the war across different countries in the region. He highlighted how significant investments, exceeding $150 billion, in Artificial Intelligence (AI) by the UAE, Qatar, and Saudi Arabia are positioning these nations close to advanced economies in terms of readiness.

Furthermore, Mr. Azour outlined how a renewed focus on geography could foster closer ties between the Gulf and the Levant through the development of new trade routes connecting to the Mediterranean. The discussion also touched upon Iran's economy, which the IMF forecasts to shrink by 9 percent due to hyperinflation and a depreciating currency. The situation in Iraq was also examined, where 80 percent of oil exports traverse the Strait of Hormuz, and 90 percent of state revenue is derived from oil.

The conversation extended to Syria, where economic growth is expected to surpass double digits this year. Mr. Azour also provided insights into Lebanon, a country grappling with a war that has displaced one-fifth of its population, in addition to a financial collapse that has persisted for seven years. The interview also covered Egypt, where inflation has decreased to 14 percent from a high of 50 percent during the previous external economic shock. Mr. Azour reflected on the potential for AI to be a bubble, while emphasizing the region's capacity to benefit from what he described as a transformative technology. The Business Extra interview is available on platforms including YouTube, Apple Podcasts, and Spotify.