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(Ecofin Agency) – Morocco managed to revive its economy after the coronavirus pandemic. However, that growth was slowed by several shocks. According to the World Bank, this year, the country plans to implement reforms to support its economy.
This year, Morocco’s growth will accelerate despite pressures from supply shocks, the World Bank indicated in a press release dated February 14, 2023.
According to the institution, the country’s GDP will grow from 1.2% in 2022 to 3.1% in 2023, after a huge fall from 7.9% in 2021. The expected growth will be recorded all thanks “to a rebound of the primary sector.” Despite the positive outlook, there are still risks since the current account deficit has grown from 2.3% to 4.1% of GDP between 2021 and 2022.
Morocco’s annual inflation rose to 8.3% in 2022 as a result of a price spike spurred by the war in Ukraine, combined with the reorganization of global supply chains. Other downside risks, including drought, the deceleration of Morocco’s main trading partners in the Eurozone, and new potential climate shocks, are threatening the economy.
To address those risks, the country plans to implement several reforms aimed at relieving low-income and vulnerable households from the impact of rising food and non-food prices. Among other things, “the Kingdom’s planned major social safety net reform will allow for an effective targeting of subsidies to support the poor and vulnerable.”
“The planned roll-out of the family allowance system will allow Morocco to effectively target the vulnerable population cost-effectively and equitably to address price hikes of this magnitude,” indicated Jesko Hentschel, World Bank Maghreb, and Malta Country Director.
The social safety net reform is especially important given that in 2022, despite general subsidies on basic products and the existing price regulating laws, annual inflation was almost one-third higher for the poorest 10% of the population than for the richest 10%. For the World Bank, the new measures will prevent more people from falling into poverty.
Jean-Marc Gogbeu
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