In 2022, North African countries struggled with the challenges of rising inflation and growth recovery, which have been exacerbated by external shocks, including the long-lasting effects of the COVID-19 pandemic and the spillover effects of Russia’s invasion of Ukraine. The region registered moderate economic growth of 4.1 percent in 2022 against 5.4 percent in 2021.

However, this growth was uneven across countries. The disruptions of global supply chains and pressure on commodity prices in the international markets instigated unfavorable effects on food and energy systems, especially in countries dependent on imports of these commodities. Consequently, the region recorded rising inflation rates, reaching 8.2 percent in 2022 up from 4.6 percent in 2021, leading to restrictive monetary policies in most North African countries. The regional fiscal deficit reached 3.2 percent of GDP in 2022 but countries’ fiscal positions varied, depending on: (i) whether the economy is an oil-exporting or an oil-importing country, (ii) the importance of subsidies on food and energy products in fiscal expenditures, and (iii) the debt service burden. North Africa’s current account deficit shrank in the region from 3.0 percent of GDP in 2021 to 0.8 percent in 2022 due to high trade surplus in oil exporting countries. Public debt, including that of State-owned enterprises, and financing needs in the region remain high. Most North African countries increased borrowing, pushing up total government gross debt, which reached on average 61.3 percent of North Africa’s GDP in 2022. The rising food and energy prices in North African countries have had significant social effects and threatened food security in the region.

Poverty incidence and unemployment, in particular youth unemployment, recently increased, highlighting the need to reinforce economic resilience and diversification in the region. Regional growth is expected to increase slightly to 4.6 percent in 2023 and stabilize at 4.4 percent in 2024 with significant disparities across countries.

Report by the African Development Bank