Morocco’s economy is expected to grow by 3.4 percent in 2021 with an increase in agricultural production attributed to more normal weather conditions and a slower increase in economic diversity, the World Bank predicts in a recent report on the evolution of the economic situation.For its part, domestic economic activities will pick up in parallel with the recovery of Morocco’s main European export markets. In its forecasts, the World Bank notes an average growth rate of 3.8 percent in 2022-2024.
Unsurprisingly, the budget deficit and public debt will also get worst, due to the Covid-19 epidemic in 2020 and 2021. With the exception of the privatization proceeds, the overall budget deficit will amount to 7.5 percent of GDP in 2020, against 3.7 percent expected before the epidemic. In this perspective, the public debt will reach 75.2 percent of GDP, against 65 percent in 2019. Over the period 2020-2024, the forecasts indicate a gradual decrease in the budget deficit, thus standing at 4.1 percent of GDP (against 3.3 percent expected before Covid-19).
It goes from 4.1 percent of GDP in 2019 to 8.4 percent in 2020, due to lower exports and tourism receipts, remittances and capital inflows. “From 2021, the current account deficit will decrease and reach 6.4 percent of GDP to gradually be absorbed over the rest of the forecast period while exports, tourism receipts, foreign direct investment (FDI) and remittances will pick up again, and the export manufacturing sectors (in particular the automobile, electronics and chemicals) will develop their activity,” experts from the World Bank explain.
Due to the Covid-19, foreign direct investment will decline by 0.6 percent of GDP in 2020. They will recover in the medium term to reach 2 percent of GDP. Regarding gross international reserves, there is a temporary decline which will represent 4.1 months of imports, before increasing to 4.9 months by 2025.
In addition, the World Bank assures that Morocco has “the opportunity to build a more sustainable and resilient economy by developing an adaptation strategy, similar to its approach on the environmental front.”