The World Bank, in turn, is revising its economic growth forecasts for Morocco in 2023 downwards, counting on 3.1% against 3.5% advanced last January. This new forecast remains, however, significantly higher than the estimated growth in 2022 (2.1%) and is at an honorable level in a difficult context. This forecast is based in particular on a rebound in the primary sector, with an increase in agricultural GDP of 9%, after -15.1% in 2022. On the other hand, non-agricultural GDP should slow down from 3.2% in 2022 to 2.5 % This year.
There world Bank joins the institutions that have lowered their forecasts of economic growth in 2023 for Morocco, but its forecast remains significantly higher than the estimated growth in 2022 and is at an honorable level in a difficult context. The establishment of Bretton Woods table, in fact, on an acceleration of the growth of the Moroccan GDP to reach 3.1% in 2023 (against 3.5% advanced last January). This prediction is also higher than those of Bank Al Maghrib (3%) and IMF (3%). It is, however, less optimistic than the forecasts of theUnited Nations (3.6%) and government (4%). The World Bank’s forecast was unveiled Tuesday in Rabat, during a virtual meeting on the conclusions of the new report monitoring the economic situation in Morocco. This acceleration in economic growth expected this year is mainly attributed to a rebound in the primary sector, according to the World Bank, which is counting on an increase in agricultural GDP of 9%, after -15.1% in 2022. On the other hand, non-agricultural GDP should slow down, according to the WB, from 3.2% in 2022 to 2, 5% this year. This recovery follows a sharp slowdown in economic growth in 2022. Indeed, according to the report, real GDP growth fell from 7.9% in 2021 to 1.2% in 2022 (estimated). The WB report entitled “Morocco facing supply shocks” notes that after a “strong post-COVID-19 rebound, the Moroccan economy has come under increasing pressure from overlapping supply shocks: a severe drought coupled with soaring commodity prices which fueled inflation.
Inflation down to 4%
The improvement in the economic situation in Morocco expected this year compared to 2022 should also concern inflationTHE account deficit current, the budget deficitthere Treasury debt. Thus, World Bank economists expect inflation to decline from 6.6% in 2022 to 4% this year. Similarly, the current account deficit would drop from 4.1 to 3.7% between the two years considered and the budget deficit from 5.1% to 4.6%. Treasury debt would decline slightly to 69% of GDP instead of 69.2% in 2022.
Inflation continues to have a greater impact on low-income and vulnerable households
World Bank officials devoted a good part of their interventions to the evolution of inflation. They note that, as in much of the world, the war in Ukraine, combined with the reorganization of global supply chains, has encouraged a sharp increase in the inflation rate. This translated in Morocco to an 8.3% peak in inflation at the end of 2022. They underlined the importance of the measures taken by the Kingdom to mitigate the repercussions of the price increase of food and energy on households, including mainly the granting of general subsidies on certain basic necessities and the maintenance of pre-existing regulated prices. This approach has stabilized the prices of goods and services that absorb almost a quarter of average household spending, thus avoiding a more pronounced increase in poverty, notes Javier Diaz Cassou, Senior Principal Economist at the World Bank, at the Morocco. This will have required the mobilization of public expenses additional, corresponding to almost 2% of GDP, he continues. However, he qualifies, despite these measures, the rise in inflation of food prices and other prices continues to have a greater impact on modest and vulnerable households. The calculations presented in the report show that annual inflation was almost 30% higher for the poorest 10% of the population, compared to the richest 10%mainly due to the impact of rising food prices, which represent a larger share of expenditure among the poorest households.
Welfare reform hailed
Those responsible for bretton woods institution also hailed Morocco for “the great rsocial protection reform envisaged” and which will result in the targeting of public aid to low-income and vulnerable households. “Recent measures aimed at countering supply shocks and preserving the purchasing power of Moroccan households mitigated the impact to a large extent, and prevented more people from falling into poverty, says Jesko Hentschel, World Bank Country Director for the Maghreb and Malta. The planned deployment of family allowance system will enable Morocco to effectively target the vulnerable population in a cost-effective and equitable manner in order to cope with price increases of such magnitude. “. World Bank officials also assessed Morocco’s monetary response to inflationary pressures. They note that in the face of the current economic situation, “the Central Bank of Morocco has opted for caution” by raising its interest rates twice since September 2022, by a total of 100 basis points. They say, however, that going forward, Morocco’s “optimal monetary policy response” will depend on whether price pressure persists and inflation expectations evolve. “In such a complex context, the authorities could consider supplementing the anti-inflationary measures by introducing structural policies aiming to relax supply constraints”, underline the economists of the WB. These measures could include, they illustrate, “initiatives or actions to address existing bottlenecks in food markets, where the large gap between producer and retail prices is not always justified by the added value created in the supply chain”.