Casablanca – The European Bank for Reconstruction and Development (EBRD) has raised its forecast for Morocco’s economic growth in 2026 to 4.8%, placing the country among the stronger-performing economies in the Southern and Eastern Mediterranean (SEMED) region at a time when geopolitical tensions, energy costs and disruptions to trade routes are weighing heavily on several neighboring economies. The bank expects Moroccan growth to moderate to 3.9% in 2027.

The new 2026 projection represents an upward revision of 0.4 percentage points from the EBRD’s June forecast, while the 2027 estimate has been reduced by 0.1 percentage point. The revision reflects a stronger-than-previously expected recovery in agricultural production after several years of drought, combined with continued support from tourism, remittances and relatively low inflation.

The Moroccan economy is entering the final part of 2026 with a considerably different agricultural outlook from the previous years. Agriculture expanded strongly during the first half of the year, with the EBRD reporting an 18.4% year-on-year increase in agricultural output. The recovery has helped compensate for weaker activity in manufacturing and construction, two areas that had contributed significantly to economic expansion in earlier periods.

The improvement in agriculture follows several years in which drought severely affected production, rural incomes and overall economic activity. Better rainfall and improved water availability have allowed agricultural output to recover, providing an important contribution to national growth. Morocco’s High Commission for Planning has also estimated that the economy grew by 4.8% year on year in the second quarter of 2026, supported by stronger agricultural activity, resilient services and continued domestic demand. It expects growth to accelerate to 5.4% in the third quarter.

The EBRD’s assessment nevertheless shows that the Moroccan economy is not relying exclusively on agriculture. GDP expanded by 4.6% year on year in the first quarter of 2026, compared with 5% during the same period of the previous year. Investment growth moderated after exceptionally high levels, while activity outside agriculture remained an important part of the expansion.

The composition of growth is particularly relevant because the agricultural rebound is expected to have a temporary effect. The EBRD forecasts growth of 3.9% in 2027, suggesting that maintaining a relatively high pace of expansion will increasingly depend on manufacturing, services, tourism, investment and other non-agricultural activities.

Morocco’s broader economic diversification has provided additional sources of activity. The EBRD’s country assessment has previously highlighted growth driven by manufacturing and services, alongside an agricultural recovery. It has also pointed to reforms involving public finances, renewable energy and the financial system as factors shaping the medium-term economic framework.

The inflation environment is another element of the current outlook. Average inflation stood at 0.5% between January and June 2026, despite temporary increases associated with energy prices. Bank Al-Maghrib has kept its policy rate at 2.25% since June 2025, maintaining the same rate at its latest meeting in September. The central bank’s decision came as inflation remained moderate and uncertainty surrounding international energy markets and geopolitical developments persisted.

The low inflation environment has provided some room for monetary stability while economic activity has strengthened. At the same time, the external energy shock remains a potential source of pressure. The EBRD’s September regional report warns that higher energy costs and disrupted trade routes are affecting economies across SEMED, with the effects varying substantially between countries.

Morocco’s external accounts have benefited from tourism and remittances, which have helped offset the impact of a wider merchandise trade deficit. Tourism has become an increasingly important source of foreign currency as visitor numbers and spending have expanded. Morocco recorded 19.8 million tourist arrivals in 2025, while tourism receipts reached about $14.8 billion, according to previously reported figures. During the first seven months of 2026, tourism receipts reached about $8.1 billion, an increase of 13.4% compared with the same period a year earlier.

Remittances from Moroccans living abroad have provided another source of foreign currency. Together with tourism receipts, these inflows have helped support the current account despite rising imports linked to investment and domestic demand.

The EBRD estimates that Morocco’s current-account deficit stood at 1.2% of GDP in the first quarter of 2026. Official foreign-exchange reserves reached $54.3 billion in August, equivalent to approximately 5.3 months of imports. The reserve position gives the country a buffer against external financing pressures and fluctuations in international commodity markets.

The fiscal position is another component of the economic outlook. The government expects the budget deficit to reach 3.4% of GDP in 2026, while the debt-to-GDP ratio is projected at 65.8%, compared with 66.6% in 2025. Morocco also accessed international capital markets in May through a bond issue that attracted demand above the amount offered.

Fiscal consolidation is taking place alongside substantial public investment and social spending. The challenge for policymakers is to continue financing infrastructure, social programs and economic development while keeping public debt and the budget deficit on a gradual downward path.

The regional comparison helps explain why the EBRD’s Moroccan forecast has attracted attention. The bank expects the SEMED region as a whole to contract by 0.7% in 2026 before recording growth of 7.1% in 2027. However, the regional figure is heavily affected by the sharp deterioration in Iraq and Lebanon. Excluding Iraq, SEMED growth is projected at 3.9% in 2026 and 4.3% in 2027.

Iraq is expected to record a 12% contraction in 2026, largely because disruptions to oil exports through the Strait of Hormuz have severely reduced export volumes and government revenues. Lebanon is projected to contract by 5% as renewed hostilities have damaged infrastructure and disrupted tourism and other economic activities. The EBRD expects both economies to recover in 2027 under assumptions of improved conditions.

Other economies in the SEMED region are expected to record positive growth, but at different rates. Egypt is projected to grow by 4.6% in 2026 and 5% in 2027, while Jordan is expected to expand by 2.5% and 2.8%, respectively. Tunisia is forecast to grow by 2.4% in 2026 and 2.3% in 2027.

Morocco’s 4.8% forecast therefore reflects a combination of domestic recovery and comparatively favorable external-account conditions rather than immunity from regional risks. The country remains exposed to higher energy prices, disruptions to international shipping and changes in global trade conditions. These factors can affect import costs, export demand and investment decisions.

The EBRD’s September report, titled “Running Dry,” places particular emphasis on pressures involving oil exports, water and global savings. The bank says these constraints are exposing vulnerabilities in energy systems, food supply chains and financing conditions across its regions. For Morocco, the water issue is particularly relevant because agricultural performance remains closely connected to rainfall, reservoir levels and irrigation capacity.

This makes the current agricultural recovery significant but also highlights the importance of reducing the economy’s exposure to climatic fluctuations. The EBRD has previously called for continued investment in renewable energy and greater integration of renewables into Morocco’s electricity system, while also pointing to potential applications in areas such as green hydrogen and desalination.

Investment in infrastructure and productive capacity is also expected to remain important. Morocco is continuing major projects linked to transport, energy, manufacturing and tourism, while private investment is expanding across sectors such as automotive, aerospace, digital services and renewable energy. The diversification of these activities could help reduce the effect of fluctuations in agriculture on overall GDP growth.

The EBRD has been active in Morocco since 2012 and currently supports projects involving sustainable energy, private-sector financing, infrastructure reform and non-sovereign investment. Its Morocco portfolio includes projects across corporate activity, financial institutions and sustainable infrastructure.

The 4.8% growth projection is also broadly consistent with a series of stronger economic indicators emerging during 2026, although forecasts from international institutions differ. The OECD, for example, projected Moroccan GDP growth at 5% in 2026 and 3.9% in 2027 in its June 2026 outlook, citing strong agricultural production and continued infrastructure investment.

The different forecasts reflect variations in assumptions about agriculture, energy prices, external demand and geopolitical conditions. The EBRD’s latest estimate nevertheless represents a clear improvement from its earlier projections and indicates that the agricultural recovery has been stronger than expected.

For 2027, the EBRD expects Moroccan growth to slow to 3.9%. This moderation would come after the exceptional contribution from agriculture in 2026 and would put greater emphasis on the ability of non-agricultural sectors to maintain momentum.

The next phase of Morocco’s growth will therefore depend on several factors, including investment, manufacturing and services, tourism, export performance, agricultural conditions and the pace of structural reforms. External developments will remain important as well, particularly energy prices, international trade conditions and geopolitical tensions.

For now, the EBRD’s latest projections show Morocco entering the final months of 2026 with stronger growth than previously expected. The agricultural recovery, resilient services, tourism revenues, remittances, low inflation and relatively strong foreign-exchange reserves are providing support, while fiscal consolidation and investment continue to shape the medium-term outlook. The key issue for 2027 will be whether growth can remain broad-based as the exceptional boost from the agricultural rebound gradually fades.