Morocco: World Bank anticipates growth of 1.1% in 2022 & 4.3% in 2023
Moroccan economic growth is expected to reach 1.1 pc this year before rebounding to 3.4 pc in 2023, says the World Bank in its latest updated forecast.
The WB says growth in Morocco is projected to slow to 1.1% in 2022 as agricultural output declines by 17.3% due to the drought. The economy is projected to be driven by a still solid but moderating industrial performance and a faster recovery of tourism. Ongoing reforms are expected to increase potential growth over the medium-term.
The fiscal impact of the health and social protection reform and postponement of the liquefied petroleum gas and flour subsidy reform will slow the consolidation of the budget deficit (6.2% of GDP in 2022).
Public debt is projected to stabilize below 80% of GDP. The current account deficit is expected to widen to 5.5% of GDP due to higher energy and food import bill.
According to the WB, this outlook is subject to various downside risks. The war in Ukraine is increasing global commodity prices, which together with the drought, could increase Morocco’s import bill and public subsidies, thereby impacting the current account and the budget balance.
In 2021, Morocco’s GDP growth rebounded to 7.4% after contracting by 6.3% in 2020. This rebound was driven by an exceptional cereal crop after two consecutive years of drought, solid exports and remittances, supportive macroeconomic policies, and significant progress on COVID-19 vaccinations.
The consumer price index posted a 3.6 yearly increase in February 2022. These inflationary pressures are related to the new shocks that the Moroccan economy is currently facing: another severe drought and surging energy and commodity prices, fueled by the war in Ukraine.