• IMF identifies North Africa as a rising hub for trade, investment and industrial growth
• Egypt and Morocco register above‑regional average growth, supported by infrastructure and exports
• Structural reforms and strategic location boost resilience and attract capital flows

North Africa is gaining economic traction in early 2026, with Egypt and Morocco leading growth and transformation. A February 2026 report by the International Monetary Fund (IMF), titled North Africa: Connecting Continents, Creating Opportunities, details how geography, infrastructure investment and policy reforms are shaping the region's expansion and drawing investor interest.

Egypt's GDP growth stabilised between 4.5 and 5.5 per cent in 2025, supported by public investment, energy projects and exports. Morocco recorded growth above 3.5 per cent over the same period, driven by automotive, aerospace and agribusiness sectors. The IMF notes that both economies benefit from proximity to European markets and from industrial linkages that are integrating North Africa into global value chains.

The report also positions North Africa as a hub for trade and energy transition. Located between Europe, Sub‑Saharan Africa and the Middle East, the region is expanding transport corridors, ports and logistics networks to function as a gateway for goods and investment. The IMF states that upgrades in infrastructure and digital connectivity are facilitating cross‑border trade and enabling manufacturers to shorten supply lines.

A separate analysis by Global Finance Magazine from late 2025 identifies Egypt, Morocco, and Algeria as accounting for a growing share of foreign direct investment in African markets, particularly in renewable energy, automotive assembly, and technology services. The publication links tourism receipts and remittances in these economies to stability and capital inflows, and notes that reforms in labour markets and business regulation have contributed to gains in competitiveness.

Challenges persist. The IMF report and industry data cite public debt ratios, with Egypt's near 80 per cent of GDP in 2025, and youth unemployment above 20 per cent in several North African countries. Water scarcity affecting agriculture is flagged as a risk to rural incomes and food security.

Additionally, foreign direct investment to Africa fell by 38 per cent in 2025, according to UNCTAD data reported by Ecofin Agency in late January. North Africa recorded one of the sharpest declines, with investment inflows failing to keep pace with the region's economic growth and development plans.

By Cynthia Ebot Takang