EBRD Lowered SEMED Economic Growth Forecast for 2026
Businesses operating in the SEMED region should account for trade and energy cost volatility as regional economic outlooks shift.
Updated on Sept. 24, 2026 in Economic Indicators
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The European Bank for Reconstruction and Development has downgraded the 2026 growth forecast for the SEMED region to -0.7 per cent. Ongoing regional tensions and oil export disruptions have contributed to significant economic volatility across the area.
Why it matters
Rising energy costs and disrupted trade routes are pressuring operating margins and supply chain reliability for companies in the region. These developments necessitate careful monitoring of inflation and logistical risks that affect regional trade and production.
The SEMED regional economy faces a 2026 contraction of -0.7 per cent, with Iraq projected to see a 12.0 per cent decline while Egypt maintains 4.6 per cent growth. Meanwhile, Tunisia saw its energy import bill climb 31.6 per cent between January and July 2026.
The players
European Bank for Reconstruction and Development
A multilateral development bank that invests in private and state-led projects to support market economies across emerging regions.
International Monetary Fund
A global organization that oversees the international monetary system and provides financial support to member nations through stabilization programs.
The details
Regional economic performance remains uneven, as severe disruptions to oil exports through the Strait of Hormuz force Iraq to rely on alternative routes with less than a quarter of normal volume. Tunisia has utilized government subsidies to dampen the inflationary pressure of global energy price hikes on local businesses and consumers. Conversely, Morocco has benefited from a significant expansion in agricultural output during the first half of 2026.
Timeline
January-July 2026: Tunisia energy import costs rose by 31.6 percent.
April 2026: Lebanon inflation spiked to 20 percent.
May 2026: Jordan inflation reached a peak of 2.8 percent.
July 2026: Egypt finalized the seventh review of its IMF-supported program.
2027: Regional economic growth is projected to rebound to 7.1 percent.
Market Landscape
The regional economic downturn reflects broader instability similar to the pressures managed under IMF-supported structural adjustment programs. Egypt's resilience, demonstrated through its latest review, provides a point of contrast to the sharp contractions seen in energy-dependent economies.
Operators in the SEMED region should evaluate their energy procurement strategies to mitigate the impact of fluctuating import costs. Businesses should also diversify logistical dependencies where possible to avoid the volatility associated with primary trade corridors.
The takeaway
Regional instability creates divergent outcomes for businesses depending on their location and dependency on energy imports. Monitor the recovery trajectory of the SEMED region toward 2027 as a baseline for adjusting long-term operational capital expenditures.
Further reading
For broader trends affecting international commerce, explore the Economic Indicators section.
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