According to the World Bank, Morocco’s economic growth will not exceed 2.7% in 2019. Economic volatility can affect the well-being of households: nearly 9 million Moroccans can be considered poor or at risk of poverty.
“The Moroccan economy continues to run below its potential, with the non-irrigated agricultural sector contributing to its volatility and other sectors recording a modest recovery, real GDP should continue to slow to 2.7% in 2019”. This is the picture drawn by the World Bank of the Moroccan economy in its report monitoring the economic situation published on October 9, 2019.
World Bank experts explain this growth rate below the country’s expectations and potential by:
– The decline in agricultural production (-2.1%). Nonfarm growth will certainly improve but will not be able to compensate.
– The contribution of net exports will remain negative, reflecting the low competitiveness of exports and dependence on energy imports.
Still weak growth in 2020-2021
The low growth rate will not be limited to 2019, according to World Bank forecasts. This last table on a growth rate of 3.3% on average in 2020-2021.
And again, medium-term prospects require sustained reforms, including to maintain fiscal discipline, increase tax revenues, improve governance and oversight of state-owned enterprises, increase exchange rate flexibility, and reform the environment of businesses and labor markets.
While the outlook is rather “average” for economic indicators, it is less so for social indicators. The World Bank report estimates that “poverty reduction is expected to be modest given growth prospects, and per capita GDP projections indicate that it will continue to decline, albeit at a much slower pace.”
High risk of falling into poverty
“By 2020, extreme poverty, measured on the basis of the international poverty line of a daily income of $1.9 in PPP (purchasing power parity), will be less than 1% of the population, while poverty, measured on the basis of the threshold of $3.2 in PPP, will be slightly higher than 5%”, analyzes the World Bank while explaining that “the planned increase of the social expenses associated with a better targeting can accelerate the pace poverty reduction beyond current expectations”.
Our economy will, however, have to face a number of external and internal risks:
– The weakness and slowdown of world trade.
– The price volatility of the main commodities.
– An uncertain geopolitical environment.
– The impact of climate change on the agricultural sector and the social demand for jobs.
– Energy imports could worsen the trade deficit if oil prices continue to rise.
– Delays in the implementation of key structural and financial reforms could undermine growth opportunities and increase social tensions.
All of these risks can have a negative impact on our economy and affect the well-being of households, especially those whose consumption expenditures are just above the poverty line.
For the World Bank, if we take the threshold of a daily income of 5.5 dollars in PPP, a negative shock even of low amplitude can affect an estimated population of 9 million Moroccans who are poor or at risk of poverty, or 24% of the population.