The Moroccan economy will slowly start to recover this year, after a year 2020 marked by the recession due to the COVID-19 pandemic and the drought that hit the Maghreb country.
Last year, GDP contracted by 6.3%, according to the World Bank, a figure which contrasts with the pre-pandemic annual growth of between 3 and 4%. Still according to the data presented by the international organisation, collected through a survey of Moroccan companies between June and July last year; 6.1 % of the companies in the formal sector have ceased their activity and 86.9 % of the companies reported a drop in sales.
For its part, the official statistical agency of Morocco, the High Commission for Planning (HCP), states that growth in 2021 will reach 4.6%, however, the chief economist of the World Bank, Javier Diaz Cassou, is more cautious and believes that economic growth will be 4%. As for the recession that the GDP will experience in 2020, the Moroccan agency is more pessimistic than the World Bank, estimating the drop in GDP at 7%.
The World Bank's report was presented at an online conference on the 14th in the presence of three of the institution's economists, the aforementioned Díaz Cassou, the director of operations for the Maghreb and Malta, Jesko Hentschel, and another of the organisation's main economists, Éric Le Borgne. At a macroeconomic level, they expect the budget deficit to have increased to 7.8% and public debt to have exceeded 76% of GDP by 2020. They also estimate that the current account deficit will worsen to 6% of GDP in 2021.
The Moroccan economy, which has not been in recession since the 1990s, is not expected to fully recover from the effects of the health crisis until at least 2022.
The two institutions base their estimates on two variables: a mass vaccination campaign against COVID-19, for which a date has not yet been set, although the Moroccan government announced last week that preparations were at a "very advanced" stage; and an agricultural campaign similar to those of previous years, which will increase the value added of this key sector for the country's economy. Another sector of great importance for Morocco is tourism, whose decline has also affected the economy of countries that depend on this sector such as Spain and Tunisia. In order for this engine of the country's economy to get back on its feet, the borders must be reopened. In 2019, 13 million people visited the country with the influx of foreign currency and the job creation that this implies.
56.1% of companies reduced working hours and 581,000 jobs were lost in just one year. However, World Bank experts say that although the impact of the crisis on Moroccan enterprises has been strong, they expect less job destruction than in other countries where the impact has been less, mainly due to the reduced flexibility of their labour laws and also due to the public support measures of the Moroccan government.
The international institution has welcomed the recovery strategy presented by Morocco, which will mobilise around 11 per cent of GDP in the form of investment funds and guaranteed loans to inject them into the capital of enterprises and give a new impetus to public-private partnerships linked to infrastructure. The World Bank also welcomed the structural reforms announced, in particular the generalisation of health insurance.
The entity stresses that in the short term, the State's liquidity injection mechanisms will be essential to avoid a wave of corporate insolvency and the destruction of the productive fabric. It also recommends that, in the long term, Morocco should promote competition and create a level playing field for new enterprises participating in goods and services markets, in addition to improving its human capital and institutional frameworks.