The Moroccan economy should contract by 2% in 2020 under the effect of the pandemic of the new coronavirus (covid-19), but know a recovery of 4% in 2021, predicts a report of the European Bank for Reconstruction and Development (EBRD).
This slowdown would be due to a sharp decrease in tourism, measures to contain the spread of this pandemic, crops likely to be bad, a recession in Europe and a drop in commodity prices, explains the latest edition of “Regional Economic Prospects” from the EBRD, which reports on the economic outlook in its regions of operations.
The growth could be favored by the boom in non-agricultural sectors, in particular the mining industry, mainly due to the negative impact of the coronavirus pandemic on phosphate production in China, notes the same source, saying that the Morocco, the world’s second largest producer of phosphate, could benefit from it.
In addition, the report highlights that in the southern and eastern region of the Mediterranean basin, the negative impact of the coronavirus should manifest itself in tourism (major engine of growth in all the region’s economies in 2019), as well as by a fall in domestic demand due to containment measures, a decrease in demand from the main trading partners and a slowdown in foreign direct investment flows.
On average, the region’s economies are expected to contract by 0.8% in 2020 before rebounding to achieve growth of 4.8% in 2021.
The central scenario of the EBRD is based on the prospect of a gradual relaxation of the domestic measures applied to contain covid-19 and a return to normalcy in the second half of the year. It assumes a limited impact of the crisis on the long-term development of economic results, but significant economic, political and social effects in the longer term.
The recovery is expected to follow a U-shaped curve, with growth picking up at the end of the third quarter. “If social distancing remains in effect for much longer than expected, the recession could be much deeper and it will take years to return to per capita production levels in 2019,” the report said.
Throughout the EBRD’s regions of operations, containment measures have had an impact on domestic supply and demand. External shocks include a sharp fall in commodity prices, which weighs on exporters of these goods, disruptions in global value chains, a collapse in tourism and a decline in expatriate remittances.
The EBRD invests in emerging economies from central and eastern Europe to central Asia, the Middle East and North Africa. Almost all of the EBRD’s countries of operations are expected to experience a contraction in economic activity this year, with a few rare exceptions, including Uzbekistan and Turkmenistan in Central Asia, as well as Egypt.