2023-05-25 10:48:51
The European Bank for Reconstruction and Development has just published its latest report on regional economic prospects and specifically on “growth in the southern and eastern part of the Mediterranean basin”.
According to the European Bank for Reconstruction and Development (EBRD), economic growth will be shy in 2023 for the southern and eastern part of the Mediterranean basin (Semed). The outlook for global inflation and political uncertainty remain downside risks, the bank said. Its report also announces a slight recovery in gross domestic product (GDP) growth in 2023, with an increase of 3.6% compared to 3.1% in 2022. According to the same source, while the economies of the Semed region are adjusting to the consequences of the war once morest Ukraine, the agricultural sector is recovering and reforms are advancing. However, the global inflation outlook and political uncertainty make the situation difficult and remain downside risks.
The recovery is expected to accelerate in 2024, with average GDP growth above 4%, as reforms progress in all countries of the region.
Focus on countries from the Semed region
For Tunisia, political instability, the economic slowdown in Europe, limited budgetary resources, lack of access to external financing, the restrictive economic environment and delays in implementing reforms are likely to continue to weigh on the economy in 2023, and growth is expected to slow further to 2% in 2023, before picking up slightly to 2.3% in 2024.
According to the EBRD report, the Tunisian economy also remains exposed to external shocks due to its relatively high dependence on tourism, food and energy imports and Europe as an export market. Moreover, “if a definitive agreement with the IMF is reached, it might release the necessary external financing and accelerate reforms, in particular the end of fuel subsidies, a reduction in the public sector wage bill, the reduction of the budget deficit and improvements in the business climate”.
This same report indicates that in Egypt, growth slowed to 4.2% between July and December 2022 (year-on-year), i.e. in the first half of the year. 2022-23, compared to 9% in the same period of the previous year. “This slowdown stems from a contraction in the manufacturing and construction sectors, which have been affected by the lack of foreign exchange, as well as the effects of the war once morest Ukraine on the Suez Canal and on revenue. of the tourism sector.
A vulnerable context and Egypt
“The Egyptian pound lost more than 50% of its value once morest the US dollar between March 2022 and April 2023, in the context of heightened external vulnerabilities and due to the decision by the Egyptian Central Bank to switch to an exchange rate regime. flexible change”.
As Egypt is a net importer of food and hydrocarbons, the rise in high global commodity prices has pushed inflation to nearly 33%, despite cumulative hikes in policy rates of 1,000 points basis in total over the past year. “This decline in growth is expected to continue and GDP is expected to increase by 4% in the 2022-2023 financial year. According to estimates, growth should reach 4.8% for the financial year 2023-2024”, announces the report.
The report from the European Bank for Reconstruction and Development states that in Jordan, “growth is expected to remain stable at 2.5% in 2023 as global headwinds persist and tight monetary conditions weigh on the economy. ‘private investment’.
In the medium term, growth will depend on the effectiveness of the implementation of the government’s “economic modernization plan” aimed at attracting foreign direct investment.
In 2024, the implementation of more structural reforms, a more accommodative monetary policy and the recovery of trade flows should support stable growth at 2.5%. The main risks for the future include reduced competitiveness stemming from an overvalued exchange rate, possible disruptions in world trade, regional instability and delays in the implementation of structural reforms.
1% growth in 2023, for Lebanon
In Lebanon, growth will be only 1% in 2023, following a decline of 4% in 2022. The EBRD explains that the condition is that “the country manages to overcome its political difficulties and to advance a program financed by the Monetary Fund international level, which would also make it possible to resume negotiations with international partners”.
Lebanon’s difficulties since 2019 have been exacerbated by rising energy and food prices as well as supply chain disruptions, while inflation has remained in the triple digits with an average by 183.8% in 2022.
The official exchange rate fell by 90% to 15,000 Lebanese pounds per US dollar on 1is February 2023, but many parallel exchange rates still exist and the local currency plunged to stand at 131,500 Lebanese pounds per US dollar in the parallel market in March 2023. In 2024, GDP is expected to grow by 3%, provided that the pace of reform progresses.
Price increase hydrocarbons in Morocco
Morocco’s GDP growth is expected to reach 3.1% in 2023 thanks to the recovery of the agricultural sector and slowing inflation, as well as the country’s removal from the gray list of the Financial Action Task Force (FATF), which restores investor confidence. For the year 2024, the EBRD announces that Morocco will return to growth at pre-pandemic levels, i.e. 3.2%. Also, the implementation of reforms might give it additional momentum. Like all countries in the Semed region, Morocco remains exposed to rising hydrocarbon prices since it is mainly an energy importer.
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