LONDON, September 24, 2026 — The European Bank for Reconstruction and Development [EBRD]’s latest Regional Economic Prospects report forecasts growth in the southern and eastern Mediterranean [ SEMED ] region at -0.7 per cent in 2026, before rebounding to 7.1 per cent in 2027.
The weaker outlook reflects the sharp downturn in Iraq following disruptions to oil exports through the Strait of Hormuz and the expected recession in Lebanon amid renewed hostilities. Egypt, Jordan, Morocco and Tunisia have remained resilient, supported by stronger agricultural output, tourism receipts and remittance inflows.
Growth across the region, excluding Iraq, is forecast at 3.9 per cent in 2026 and 4.3 per cent in 2027.
Regional tensions continue to affect the SEMED economies through higher energy costs, disrupted trade routes and increased uncertainty, amplifying existing fiscal and external vulnerabilities in several markets.
The SEMED economies in detail
Egypt
Egypt’s economy is forecast to grow by 4.6 per cent in 2026 and 5.0 per cent in 2027 (calendar years).
Economic activity has remained resilient, supported by communications, trade and petroleum refining. Remittances and tourism receipts increased strongly in the first quarter of 2026, helping to support external balances despite heightened regional uncertainty.
Egypt completed the seventh review of its International Monetary Fund [IMF]-supported programme in July 2026, and international reserves reached record levels. However, fiscal pressures remain significant, with gross government financing needs estimated at around 50 per cent of gross domestic product for fiscal year 2027.
Growth is expected to strengthen further in 2027 despite significant downside risks related to the impact of instability in the Middle East on energy markets and foreign investor sentiment.
Iraq
Iraq’s economy is expected to contract by 12.0 per cent in 2026, before rebounding by 14.0 per cent in 2027.
The sharp downturn reflects severe disruptions to oil exports through the Strait of Hormuz. Alternative export routes have carried less than a quarter of Iraq’s normal export volumes, significantly reducing export earnings and government revenues.
Given Iraq’s reliance on hydrocarbons, the disruption has had a substantial impact on growth, public finances and foreign-exchange reserves. The outlook for 2027 assumes a normalisation of oil exports and a corresponding recovery in economic activity.
Jordan
Economic growth in Jordan is expected to slow to 2.5 per cent in 2026, weighed by regional instability, trade interruptions and increased uncertainty around tourism and investment flows.
Higher fuel prices pushed inflation to a peak of 2.8 per cent in May 2026 before moderating to 2.7 per cent in July.
International reserves remain comfortable with more than eight months of import cover, helping to support macroeconomic stability during a period of heightened uncertainty.Growth is expected to recover to 2.8 per cent in 2027, provided trade bottlenecks are resolved and energy prices decline.
Lebanon
The Lebanese economy has been severely affected by resumed hostilities with Israel in the first half of 2026. The economy is expected to contract by 5.0 per cent by the end of 2026before bouncing back by 4.0 per cent in 2027, provided a sustained ceasefire is achieved and the country is able to repair damaged infrastructure.
The resulting economic and humanitarian shock disrupted activity across tourism, a major source of foreign exchange, and other key sectors, and fuelled inflation, which doubled to around 20 per cent year on year in April 2026, before slowing somewhat to 15.7 per cent in July. Further damage to infrastructure, especially in the south, has added to the already substantial US$ 11 billion reconstruction bill from previous rounds of conflict.
The outlook remains highly uncertain and depends heavily on the security situation, reconstruction efforts and progress on economic reforms needed to unlock international support.
Morocco
Morocco’s economy is forecast to grow by 4.8 per cent in 2026, before moderating to 3.9 per cent in 2027.
The outlook has improved following a strong recovery in agricultural output after several years of drought. Agriculture expanded significantly in the first half of 2026, offsetting weaker activity in industry and construction.
Tourism receipts and remittances continued to support external balances, while inflation remained very low despite higher regional energy prices.
Morocco is expected to remain among the strongest-performing economies in the SEMED region over the forecast period.
Tunisia
Tunisia’s economy is projected to grow by 2.4 per cent in 2026 and 2.3 per cent in 2027.
Improved agricultural production has helped offset weaker performance in chemicals, textiles and other industrial sectors, supporting modest growth despite a challenging external environment.
Inflation averaged 5.1 per cent between January and July 2026, amid higher commodity prices and a temporary spike in food prices. While government subsidies softened the inflationary impact of higher global energy prices, the energy import bill rose by 31.6 per cent in January-July 2026, likely adding to the 2026 fiscal deficit.
Growth is expected to remain moderate, reflecting continued external vulnerabilities to higher global commodity prices and trade policy uncertainty.
https://thecooperator.news/ebrd-supports-growth-of-kenyas-local-currency-market-with-us-50mln/
Buy your copy of thecooperator magazine from one of our country-wide vending points or an e-copy on emag.thecooperator.news
