Middle East conflict to hit Egypt and Morocco’s 2026 growth

Egypt growth down to 4% Morocco down to 4.2% GDP will recover in 2027 Economic growth in Egypt and Morocco will decline this year, driven by the ongoing conflict in the Middle East , the African Development Bank (AfDB) said in a new report. Oil prices rose nearly 2 percent on Thursday morning after the US carried out new strikes on an Iranian military site despite a fragile ceasefire since April. In its 2026 economic outlook, AfDB said growth in Egypt is projected to decline from 4.4 percent in 2025 to 4 percent in 2026 due to austerity measures aimed at mitigating the Iran war’s impact on public finances and inflation. However GDP will recover to 4.3 percent in 2027, the report said. Egypt’s Prime Minister Mostafa Madbouly said in March that the country’s gas import bill had increased by $1 billion a month since the outbreak of the Iran war on February 28. Egypt’s economic indicators Cairo launched a seismic survey late last year to explore for oil and gas in areas that account for nearly a 10th of the country’s land mass. It plans to drill 101 oil and gas wells this year, as part of a $5.7 billion investment approved by the government in 2025 to start drilling 480 wells over the next five years. Although Egypt’s inflation is declining, it remains in double digits due to a combination of the pass-through from currency devaluation and a large fiscal deficit. Morocco and Mena economies in numbers Wealth funds likely to increase African investments AfDB forecasts growth in Morocco to decline from an estimated 4.7 percent in 2025 to 4.2 percent in 2026, but this is expected to rise to 4.3 percent in 2027, driven by the dampening impact of higher energy prices. Slower projected growth will be reinforced by the effects of increased depreciation of the Moroccan dirham on the cost of imports and fiscal position, the report said. Morocco plans to increase its budget to mitigate the impact of higher energy costs resulting from the Middle East conflict. The 2026 budget is likely to be raised by MAD20 billion ($2 billion), Reuters reported, citing an unidentified government official. Morocco’s economic indicators Overall, AfDB said Africa’s real GDP growth is projected to moderate to 4.2 percent in 2026, before recovering to 4.4 percent in 2027. The impact of the Iran war on growth and macroeconomic stability will depend on the duration of global supply chain disruptions and their effects on global energy and fertiliser prices, it said. Growth projections for 2026 and 2027 assume that the conflict will last only for two to three months, it added. Assuming that it lasts for three to six months before a gradual de-escalation of tensions, real GDP growth is projected to decline by 0.4 percentage points to 4 percent in 2026.