Saudi Arabia’s economy is proving resilient to the shock of the Iran war, with higher oil prices offsetting lower export volumes, but overall growth will still likely fall to around 2% this year, according to the International Monetary Fund.

The kingdom was demonstrating “agility in resilience” in its ability to redirect shipping and logistics routes, the Washington-based lender said after staff concluded a mission to the country. It added that a windfall from high oil prices will reduce projected current account and fiscal deficits this year, but also warned that a prolonged conflict could hit investor confidence and weaken diversification prospects.

The latest Purchasing Managers Index showed that Saudi business confidence rebounded in May to 52.8 — any figure above 50 indicates economic expansion — as a ceasefire between Iran and the US largely continued to hold and supply chains improved. Still, the index remains below its long-term average, with domestic demand helping to offset a contraction in exports, which dropped for a third month.