In its latest report on Morocco’s economic situation, the World Bank estimates that the Kingdom stands out as a country that has taken advantage of the Covid-19 crisis to make it an opportunity and launch an ambitious program of transformative reforms.
After its first efforts to mitigate the immediate effects of the pandemic on households and businesses, Morocco launched various policies to correct long-standing inequalities and overcome certain structural obstacles that have limited the performance of the Moroccan economy in the past, emphasizes the institution.
This reform program is based on the creation of a Strategic Investment Fund (the Mohammed VI Fund) to support the private sector, the overhaul of the social protection framework to boost human capital and the restructuring of the vast network of Moroccan public enterprises. In addition, the government unveiled the terms of a new model that emphasizes human development and gender equity, while re-energizing recent efforts to encourage private entrepreneurship and boost competitiveness.
If their implementation is successful, these reforms could lead to a stronger and more equitable growth trajectory. However, the World Bank notes, in the shorter term, the economic recovery could be gradual and irregular. Although activity picked up in the second half of the year, 2020 ended with the biggest economic recession on record.
It forecasts that real GDP growth will rebound to 4.6 percent in 2021, supported by the good performance of the agricultural sector and a partial recovery in the secondary and tertiary sectors. In this baseline scenario, real GDP would not return to its pre-pandemic level until 2022 and the cumulative loss of production caused by the crisis would be significant.
The large and uneven socio-economic impact of the crisis was partly mitigated by the large cash transfer programs put in place during the lockdown period. A peculiarity of the Moroccan case is, according to the institution, that the mitigation measures adopted by the authorities succeeded in cushioning the reduction in income that a large part of the poorest households (formal and informal) would otherwise have suffered, avoiding thus a much larger increase in poverty.
However, since these measures were temporary in nature, a more structural approach would be needed to ensure that the benefits of the post-Covid-19 recovery are more evenly distributed, argues the World Bank. The Kingdom has already announced an in-depth reform of the social protection system, including the generalization of health insurance and family allowances.
Nevertheless, the long-term challenges that characterize the labor market in Morocco must be addressed, namely its insufficient capacity to create new jobs even when the economy is growing, high inactivity, especially among the youth and the female population, and the insufficient decline in levels of informality.