IMF says energy prices will send Morocco inflation higher

• Moroccan inflation to hit 2%
• Iran war causing higher energy prices
• IMF expects debt reduction

Morocco is expected to experience a temporary rise in inflation in the medium term from currently low levels due to higher energy prices, the International Monetary Fund said.

Average inflation remained low at 0.8 percent in 2025, but is anticipated to reach about 2 percent over the medium term, the IMF said in its latest Article IV consultation report.

Real GDP growth is forecast at 4.4 percent for 2026, 4.5 percent for 2027 and 4 percent over the medium term, assuming agricultural production remains normal and infrastructure investment continues, with significant private-sector participation.

“Growth will be affected in the near term by the ongoing conflict in the Middle East, which is driving higher energy prices and weaker external demand,” said IMF deputy managing director Kenji Okamura. 

The US-Israel and Iran conflict pushed crude oil prices to $120 a barrel, before falling back, amid supply constraints as Tehran targeted energy and water projects across the Gulf.

According to the IMF, Morocco’s overall fiscal deficits for 2026 and the medium term remain consistent with a gradual reduction in the debt-to-GDP ratio by 2031.

However, Morocco’s economy and finance ministry said its budget shortfall surged to nearly MAD34.5 billion ($3.7 billion) in January-February, from MAD24.8 billion in the same period last year, due to a sharp increase in spending on projects to support the country’s hosting of the 2030 football World Cup, coupled with lower revenue.

Morocco’s outlook faces external risks, driven by higher commodity price volatility, the ongoing conflict, increased trade barriers and global supply-chain disruptions.

Okamura advised the government to maintain prudent macroeconomic policies, manage fiscal and economic risks, increase investment in human capital and implement structural reforms to boost growth and job creation.

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In April 2025 the IMF approved a $4.5 billion flexible credit line for Morocco to help rebuild buffers and accelerate structural reforms in an uncertain external environment.

The Moroccan government intends to continue treating the flexible credit line arrangement as precautionary and gradually exit it depending on the evolution of external risks, the statement said.