Maghreb provides cause for optimism
27 July 2023
Commentary
John Bambridge
Analysis editor
Despite high inflation, the Maghreb region appears in better health in 2023 as the shocks from Covid-19 and the food inflation from the war in Ukraine recede into the background. The estimated real GDP growth rate for the region is now at 4.4 per cent, up from a meagre 0.7 per cent the year before.
Central to this growth is the recovery of Libya, which has benefitted from a period of relative stability. Morocco’s growth has also crept up, to 3 per cent, while Algeria’s remains respectable, at 2.6 per cent. Only Tunisia is faltering, amid its ongoing political and economic crisis, with its growth dropping to 1.3 per cent. Public debt remains a problem, but regional debt levels have stabilised amid higher growth.
Algeria’s priority is maximising the gains from recent spikes in gas prices, and catering to European countries interested in bolstering Algerian gas production as an alternative to Russia. This is good news from a project perspective, with the state energy firm Sonatrach planning to invest more than $30bn in gas exploration and production, with a view to boosting exports.
Libya’s fortunes hang on restoring its prior oil production levels, and this is pinned to maintaining security and political stability. Amid the current relative calm, Libya’s National Oil Corporation and Italy’s Eni have discussed investing up to $9bn in developing new gas reserves. Short of a settlement to unite east and west, however, the country will remain on the edge politically.
Morocco’s recent angle is also all about energy, but of the renewable energy and hydrogen export type. Solar to hydrogen could also be a multibillion-dollar opportunity in the country, with foreign interests looking to develop green hydrogen schemes. Serbian investor CWP Global is planning a 15GW solar-to-hydrogen project budgeted at $20bn. UK firm Xlinks also hopes to establish an $18bn solar plant linked directly to the UK grid.
Tunisia’s economy is undercut by structural issues and the persisting political chaos since the election of President Kais Saied, whose most recent surprise act was to reject a $1.9bn IMF bailout deal. The EU offered an alternative option for financial assistance in July in exchange for assistance on migrant transit, but Tunis’ balance of payments situation remains dire.
While recent trends are cause for optimism, the Maghreb region continues to be highly exposed to global energy and commodity markets, and therefore vulnerable to future shocks.
This month's special report on the Maghreb includes:
> ECONOMY: Maghreb states chart varying growth paths
> OIL & GAS: Maghreb energy project activity doubles
> LIBYA OIL SECTOR: Libya has potential for energy project surge
> LIBYA OIL & GOVERNANCE: Libya seeks to rebuild oil sector credentials
> LIBYA OIL & GAS SNAPSHOT: Renewed focus on Libya as a source of oil and gas
> MOROCCO ENERGY: Morocco gas and fertiliser project activity surges
> POWER: Morocco leads Maghreb energy transition
> CONSTRUCTION: Big construction plans offer hope to Maghreb market
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