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The World Bank confirms lasting economic recession in Morocco

The last monitoring report of the economic situation in Morocco, established by the World Bank Group, more precisely by the Middle East and North Africa (MENA) unit of the World Practice for Macroeconomics, Trade and Investment (MTI), draws up a worrying inventory of the economic situation in Morocco and announces the next development.

According to this report, Morocco has achieved, over the past 20 years, considerable economic and social progress through significant public investment, “structural reforms”, as well as measures ensuring macroeconomic stability. This would have made it possible to reduce extreme poverty and increase life expectancy, with greater access to “essential public services” and the development of numerous public infrastructures.

Paradoxically, despite these achievements, the same report underlines that “the sudden shock of Covid-19 has dragged the economy into an abrupt recession, the first since 1995”, which recalls the speech of the late King Hassan II, evoking the risk of a possible “heart attack” to which Morocco was exposed. Thus, the WB team that established this report announces a decrease in real GDP to -4% in 2020, and explains this contraction by the fall in the production of goods and services, the reduction in exports, the disruption of global value chains, as well as a decline in international tourism. Companies have thus been forced to reduce, and sometimes even stop, their production activities and their workforce. Workers, especially those in the highly vulnerable informal sector, are the first to suffer a “shock of historic proportions”. Government aid, would have helped mitigate, in part, the loss of income of 19% of households. The current account deficit is expected to reach -8.4% in 2020, despite the drop in imports (except for cereals, whose imports increased, at the end of July 2020, by 50%, compared to the same period of the year 2019). This decline is mainly due to the decline in exports, tourism receipts and remittances from Moroccans living abroad. Public revenue, especially tax, will experience a lasting decline, while public spending, especially that relating to health and social protection in general, will increase. Thus, the budget deficit should reach – 7.5%, in 2020. Public debt will have to increase.

In the immediate term, the government response was swift and decisive, averting a large-scale epidemic. However, for the authors of said WB report, the Post-Covid-19 economic recovery will take a long time. Growth can only resume to its previous level from 2022, with a high degree of uncertainty that is unfavorable to private investment. Faced with this situation, the World Bank team advocates moving from a mitigation phase to an adaptation phase to ensure resilience (…). Dark prospects that can only reinforce doubt and uncertainty. In fact, the health crisis was above all an accelerator and a revealer of the structural obstacles to development, existing long before, and for which a commission in charge of the new development model was created by the Sovereign. This is a very hopeful endogenous process.

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