ASTANA — War in the Middle East is sending economic shockwaves into Central Asia, exposing the region’s vulnerability to global disruptions even as oil exporters like Kazakhstan see short-term gains, said Director of the International Monetary Fund (IMF) Middle East and Central Asia Department Jihad Azour, presenting the IMF’s April 2026 Regional Economic Outlook Update on April 16.
“Commodity price volatility and trade disruptions do not stop at borders, and the risks for this region are also to the downside,” said Azour. According to the IMF, the shock stemming from the conflict is broad and multifaceted, affecting energy markets, logistics, and financial conditions simultaneously.
Azour described it as “a severe and multifaceted shock” to one of the world’s most strategically important economic corridors. While a ceasefire announced in early April offers some relief, uncertainty remains high, with risks firmly tilted to the downside. Jihad Azour, Director of the Middle East and Central Asia Department at the International Monetary Fund (IMF) attends a press conference at the IMF/World Bank 2026 Spring Meetings in Washington, D.C., U.S., April 16, 2026.
REUTERS/Elizabeth Frantz Reuters/REUTERS The region entered 2026 on a relatively strong footing, with economic growth reaching 6.2% in 2025. However, the IMF now expects expansion to slow to 4.8% this year, as tailwinds linked to Russia’s war in Ukraine fade and new headwinds from the Middle East conflict emerge.
Inflation remains elevated at around 8%, driven in part by rising global commodity prices. At the same time, uneven fiscal and external buffers leave countries exposed to tighter global financial conditions. For energy exporters such as Kazakhstan, higher oil prices may provide short-term fiscal relief.
Yet the broader picture is more complex. Trade disruptions, rising import costs, and financial market volatility are expected to weigh on growth, underscoring the region’s exposure to external shocks. Energy shock ripples through global markets At the center of the disruption is the Strait of Hormuz, through which roughly one-fifth of global oil supply and a quarter of liquefied natural gas (LNG) trade typically pass.
The conflict has brought flows through the strait to a near standstill, triggering a sharp contraction in energy production across the Gulf Cooperation Council (GCC) countries. Oil output has fallen by an estimated 13 million barrels per day, while gas production has also declined significantly.
The market reaction was immediate. Brent crude prices surged above $100 per barrel, peaking at $118 before easing following the ceasefire. European gas prices jumped by around 60%, surpassing the spikes seen after the Russia-Ukraine conflict. However, the disruption extends beyond hydrocarbons.
The strait is also a critical artery for global fertilizer trade, with roughly one-third of supplies passing through it. As a result, urea prices have risen by about 30%, while aluminum and phosphate prices have increased by roughly 20%. These pressures are expected to feed directly into higher food prices, particularly in import-dependent economies.
“Taken together, this shock is broad, deep, and still unfolding,” Azour said.