Despite recovering in 2021, economic growth in North Africa has been in decline for two consecutive years, slowing from 4.3 per cent in 2022 to 2.1 per cent in 2023. The decline has been driven by lower oil production, tight policy settings and, most important, the numerous challenges that have beset the economies of the subregion. The ongoing conflict between the Russian Federation and Ukraine and the repercussions of the war in the Sudan have led to a marked decline in economic growth in the subregion overall in 2023, driven in particular by a contraction of 37.5 per cent of real gross domestic product (GDP) in the Sudan.
Natural disasters, such as floods in Libya and an earthquake in Morocco, have had a significant impact on human and physical infrastructure. The impact of climate change, in particular drought, has further exacerbated the challenges, undermining efforts to control inflation. Morocco and Tunisia have faced consecutive years of low rainfall, which is undermining food security. Furthermore, the ongoing conflict in the Gaza Strip has directly affected Egypt economically, given its geographical proximity and historical trade relations.
