Morocco Economic Outlook
- The economy has strong prospects for economic growth and measures to strengthen the macroeconomic base have reduced the budget and current account deficits.
- The government continued improving the business climate and adopted a 2014-20 industrial strategy to support structural change and boost the country’s position in global value chains.
- Morocco has made great efforts to meet social challenges and regionalisation has speeded up to improve living conditions, but regional and spatial disparities are still considerable.
The government maintained its policy of improving the business climate and encouraging private investment in 2014 so as to support economic transformation. These efforts gave Morocco a ranking of 71st out of 189 countries in the World Bank report Doing Business 2015. A new industrial strategy (for 2014-20) was launched to drive structural change and strengthen the country’s position in global value chains.
The government pledged to continue making Morocco a regional hub to take advantage of free-trade agreements that boosted its trade with sub-Saharan Africa by 13% in 2014.
Ongoing efforts to strengthen the macroeconomic base through structural reforms and sectoral strategies helped expand the economy by 2.7% in 2014 despite a poor harvest and low external demand. Internal and external balances improved, with the budget deficit shrinking to 4.9% of GDP and the current account deficit to 6% of GDP, and exchange reserves improved to the equivalent of five months and nine days of imports. Growth prospects for 2015 and 2016 are a healthy 4.5% and 5%, with further reduction of the budget deficit. But the trade balance remains structurally in deficit (19.8% of GDP in 2014).
The government continued its great efforts to meet social challenges and took several measures in 2014 aimed at improving living conditions and social and spatial cohesion. Decentralisation is set to continue in 2015, notably with municipal and regional elections that will speed up application of the advanced regionalisation project and provisions in the 2011 national constitution.
This has all produced significant results in poverty reduction and access to education and health care. Poverty shrank nationwide from 15.3% to 6.2% between 2001 and 2011 but the drop hid sharp spatial and gender disparities. The Gini coefficient reflected growing income disparity, rising from 39.5 to 40.9 between 1999 and 2007; poverty remained chiefly rural (14.4% compared with 4.8% in urban areas) and unemployment was especially high in cities (36%, with only 8.4% in the countryside) and among 15-24 year-olds (20.1%) in 2014.
To meet the challenge of persistent vulnerability and inequality, Morocco should continue essential reforms and speed up implementation of those already begun. The growth analysis by the African Development Bank, the government and the Millennium Challenge Corporation stresses reforms in justice, taxation, land law and education.