Middle East Conflict Threatens Moroccan Economic Gains, Inflation Concerns Rise

The ongoing conflict in the Middle East casts a shadow over Morocco’s promising economic outlook, potentially reversing recent gains and reigniting inflationary pressures. Economists warn of disruptions to energy supplies, trade routes, and financial stability, prompting debate over the appropriate monetary policy response from Bank Al-Maghrib (BAM).

Inflationary Pressures Expected to Return

Ahmed Azirar, an economist and market intelligence expert, asserts that the conflict will “even certainly” revive inflationary pressures in Morocco, particularly through rising prices for energy and raw materials. This assessment comes after Bank Al-Maghrib maintained its key interest rate at 2.25% in December 2025, aiming to support anticipated economic growth of nearly 5% in 2026 even as keeping inflation low at 1.8% .

Stock Market Reacts to Geopolitical Uncertainty

The Casablanca Stock Exchange immediately reacted to the outbreak of the crisis with a decline, erasing the profits of the previous half-year, demonstrating the business world’s sensitivity to the global situation . Concerns center around the supply of hydrocarbons and potential disruptions to shipping through the Strait of Hormuz, as well as potential production halts in key Middle Eastern oil-producing nations like Qatar, the United Arab Emirates, and Saudi Arabia.

Broader Economic Impacts Anticipated

Beyond energy, the conflict is expected to disrupt both internal and external trade, impacting logistics chains and driving up inflation across various sectors, including food, industrial inputs, and services. Financial disruptions, such as currency fluctuations, reduced foreign direct investment (FDI) from the Middle East, and tighter liquidity, are also anticipated. Azirar describes the situation as a “Covid 19 bis,” highlighting the potential for widespread economic fallout.

Bank Al-Maghrib’s Policy Dilemma

The unfolding crisis presents a challenge for Bank Al-Maghrib, which is scheduled to hold its first quarterly monetary policy meeting on March 17, 2026. The central bank faces a dilemma: whether to react immediately with potential measures to curb inflation, risking a slowdown in economic growth, or to adopt a wait-and-see approach.

Azirar leans towards the latter, suggesting that inflation will initially be imported before becoming entrenched domestically. He emphasizes the time lag associated with the impact of Morocco’s key interest rate and advocates for proactive fiscal policy measures.

Recommendations for Morocco

Azirar recommends maintaining the current key interest rate while scheduling a follow-up meeting of the Council in the following month. He stresses the urgency of economic policy adjustments on the budgetary side, activating all available levers related to revenue, expenditure, and debt, even if it requires reprogramming projects. Diversification of energy supplies, acceleration of energy infrastructure projects at the port of Nador West Med, and financial support for growth through improved banking conditions are also recommended. Finally, he calls for a national mobilization to capitalize on opportunities arising from the changing economic landscape, particularly in logistics, exports, and tourism.