Meed | Prospects for Maghreb improve

Prospects for Maghreb improve

6 August 2024

Commentary
John Bambridge
Analysis editor

The economic prospects of the Maghreb region are looking up in 2024 as a confluence of sustained growth, lower inflation – both globally and regionally – and a strong uptick in project activity bode well for business in the near-term. The fall in inflation is a particularly welcome reversal of a long-term inflationary trend in the region amid the impacts of Covid-19 and the war in Ukraine – events that also hurt non-oil growth in various sectors.

Things are now on the mend for both Rabat and Tunis, however, as Morocco is drawing more and more foreign investment in the renewable energy and automotive sectors, and Tunisia is seeing growth in traditional goods such as olive oil exports. Tourism flows are also recovering.

Global energy trends meanwhile favour the Maghreb’s other two markets, with higher gas prices turbo-charging Algeria’s economy, and Opec-sustained oil prices helping Libya to slowly get back to its feet.

The past 12 months have more detrimentally seen deadly 2023 winter floods ravage Libya’s northern coastline, and Morocco enter its sixth consecutive year of drought – both signs of adverse climate change.

Then there is the political environment, which is less fortuitous. Libya’s opposing factions have made no progress towards unifying and Abdoulaye Bathily, the UN’s Libya envoy of 18 months, resigned in April in despair. Algeria and Tunisia are meanwhile both headed in 2024 for contentious elections already marred by the suppression of the opposition.

Despite the dim political backdrop, the region’s projects market appears to be improving – already topping $11bn in contract awards in 2024 and besting the 2023 awards figure by just mid-July. Project awards have also significantly outpaced project completions year-to-date, resulting in a roughly $7bn upswing in a decade in the value of work under execution.

This had been led by major oil and gas project awards in both Algeria and Libya off the back of the higher hydrocarbon revenues. There is then a further $16.9bn-worth of work in bidding in the region, and a further $8bn in prequalification. Alongside more oil projects, much of this value represents ambitious rail schemes that are making their way to tender.

Overall, the region appears to be steadily righting itself economically despite the less than positive political developments in the background, and with inflation on the descent, the wind appears to be at the region’s back.