The IMF’s October 2025 Regional Economic Outlook upgrades growth prospects across MENAP, projecting regional GDP growth of 3.2 per cent in 2025 and 3.7 per cent in 2026, up from 2.1 per cent in 2024. This upward revision reflects stronger oil production in exporters, a rebound in tourism and remittances for several oil-importing economies, and payoffs from recent structural reforms in a handful of emerging markets.
For North Africa, the message is cautiously upbeat: most countries in the subregion are expected to register stronger activity in 2025, fuelled by tourism recoveries, domestic demand and, in some cases, resurgent hydrocarbon output. These gains are, however, uneven across countries, leaving policymakers to manage near-term opportunities alongside medium-term vulnerabilities such as fiscal pressures, exchange-rate and external risks, and exposure to global uncertainty.
READ ALSO: IMF Sounds Alarm, But Africa Must Lead Its Own Fiscal Path
North Africa’s countries show varied trajectories in the IMF’s country tables. Egypt is projected to grow by 4.3 per cent in 2025 and 4.5 per cent in 2026, reflecting a combination of stronger tourism, resilient remittance inflows and stabilising macroeconomic conditions. Morocco is forecast at 4.4 per cent in 2025 and 4.2 per cent in 2026, supported by investment and an agricultural rebound. Tunisia is expected to expand by 2.5 per cent in 2025 and 2.1 per cent in 2026, while Mauritania’s growth moderates to about 4.0 per cent in 2025 and 4.3 per cent in 2026 from an elevated 2024 base. These country figures are taken directly from the IMF’s real GDP growth table.
Algeria and Libya illustrate the contrasting dynamics within North Africa. Algeria is projected to grow by roughly 3.4 per cent in 2025 and to slow to about 2.9 per cent in 2026, reflecting modest non-oil momentum amid oil-sector constraints. Libya shows a pronounced rebound in 2025, a projected expansion of about 15.6 per cent as oil production recovers, before moderating to about 4.2 per cent in 2026 as output stabilises following the bounce. These country projections are reported in the IMF country table for non-GCC oil exporters.
Sudan’s path is exceptional and heavily conditional on political and reconstruction dynamics: after a contraction in recent years, the IMF projects a recovery that accelerates from 3.2 per cent in 2025 to 9.5 per cent in 2026 in the baseline scenario, a reflection of reconstruction and normalisation assumptions that carry significant uncertainty. Mauritania’s near-term moderation reflects lower mineral (gold) output relative to 2024, while Egypt and Morocco draw strength from tourism, remittances and policy stabilisation measures. All of these country-level projections are in the IMF October 2025 tables.
The North African picture cannot be separated from global energy dynamics. The IMF’s baseline assumes oil prices averaging about US$68.9 a barrel in 2025 and US$65.8 a barrel in 2026, assumptions that shape the outlook for oil exporters and importers across the region. Higher oil production, where it occurs, materially lifts growth in places such as Libya, while lower prices or production constraints weigh on fiscal and external balances in other exporters. These oil assumptions and methodological notes are explicit in the IMF report.
Tourism has been a key driver of the upgrade for several North African economies. Egypt, Morocco and Tunisia are singled out in the IMF analysis as beneficiaries of a strong tourism recovery in 2025, which, together with resilient remittance inflows (notably to Egypt), underpins household demand and current-account resilience. The IMF emphasises that these services inflows have helped to rebalance external positions even as other pressures persist.
Fiscal and External Guardrails
The IMF cautions that growth gains come with fiscal and external risks. Several North African economies still face elevated public debt and tight financing conditions; Tunisia and Algeria are highlighted among those with notable fiscal strain or public-debt vulnerabilities. The report points to the need for credible fiscal consolidation combined with measures to protect vulnerable households, and stresses that improvements in fiscal frameworks can lower sovereign risk premia and expand policy space over time. In short, the growth figures reflect an opportunity window that policy-makers should use to strengthen buffers rather than loosen them.
At the external level, Morocco’s near-term growth is also associated with larger investment-driven imports (the IMF notes the expected import momentum ahead of major infrastructure projects), which suggests that headline GDP gains may be accompanied by some deterioration in current accounts unless export capacity and tourism receipts keep pace. The IMF flags similar external pressures for Tunisia.
Geopolitics, Financial Conditions and The Oil Price Path
The IMF underscores that risks to the North African outlook are tilted to the downside. Geopolitical tensions in the broader region, a sharper-than-expected rise in global interest rates, or an abrupt swing in oil prices would each present material downside risks. The report’s scenario analysis and risk discussion make clear that country outcomes will depend heavily on the discipline of macroeconomic policies, speed of structural reforms, and the ability to mobilise external financing on favourable terms where needed.
The IMF baseline behind the projections uses a set of working assumptions and conventions that are important to keep in mind. The staff assumption for oil prices is an average of roughly US$68.92 per barrel in 2025 and US$65.84 per barrel in 2026; the three-month nominal US T-bill yield is assumed to average about 4.3 per cent in 2025 and 3.7 per cent in 2026. The projections reported in the October 2025 outlook are based on data available through the end of September 2025 and are staff projections rather than formal forecasts by IMF management or the Executive Board. Those methodological notes and assumptions are stated in the report’s front matter and tables.
What Does This Mean For Investors And Markets?
For policymakers in North Africa, the IMF’s October 2025 figures amount to both opportunity and urgency. The near-term growth gains should be channelled into rebuilding fiscal buffers, accelerating reforms that improve revenue mobilisation, and investing in export capacity (including tourism infrastructure and logistics). Where oil-sector gains are temporary or volatile, authorities should resist easing fiscal stances that would leave public finances exposed to the next shock. The IMF explicitly recommends stronger fiscal frameworks and attention to social protection as a way to make growth more durable.
For investors and markets, the message is to differentiate across countries. Egypt and Morocco’s projections suggest durable demand drivers and visible reform momentum, while Libya’s large 2025 bounce is conditional on oil-sector normalisation and therefore carries higher political and operational risk. Algeria’s slower path underlines the importance of non-oil diversification. From a sovereign-risk perspective, improvements in fiscal rules and credible debt management will be the clearest routes to sustainable yield compression and better market access.
Measured Optimism, Conditional on Policy
The IMF’s October 2025 outlook brings a welcome upgrade for MENAP and a cautiously positive narrative for North Africa. The region’s performance in 2025 looks stronger than many expected a year earlier, supported by tourism, remittances, investment in some countries, and a rebound in oil output in others. Yet the upgrade is not a guarantee of a lasting acceleration: success will depend on pragmatic policy choices that convert a cyclical improvement into the foundations of sustainable, inclusive growth. The country numbers and the broader regional diagnosis used in this article are taken directly from the IMF’s October 2025 Regional Economic Outlook.
