- North Africa
- North Africa Regional Overview
- North Africa Regional Integration Strategy Paper (NA-RISP)
- Souk At-tanmia
- The Middle East and North Africa (MENA TF) Transition Fund
- The Middle Income Country Technical Assistance Fund (MIC TAF)
- The Multi-Donor Trust Fund for Countries in Transition (TFT)
- West Africa
- East Africa
- Central Africa
- Southern Africa
- Non-Regional Member Countries
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Morocco Economic Outlook
Macroeconomic performance and outlook
At 2.9%, real GDP growth in 2019 continued to decelerate. Water stress limited the performance of the agricultural sector, which involves about 46% of the active population. And growth was slow in the eurozone (76% of Morocco’s trade). But since 2013, there has been greater impetus in diversifying exports in global value chains—automobiles (up 13%), agrifood (8.2%), aviation (10.1%), and electronics (6%).
Since 2013, the secondary sector’s share of GDP has remained fairly constant (26.1% on average). The share of agriculture in GDP stagnated at 12.4% on average, despite the Moroccan Green Plan, with its goal of promoting agriculture and linking it more closely to industry. The unchanging GDP composition reflects the low productivity of agriculture and industry.
Efforts to improve macroeconomic conditions in 2019 will continue into 2020 and 2021. Budget policy will aim to accommodate a fall in grants from the Gulf Cooperation Council (GCC), rising social spending for more inclusive development, and more rigorous and prudent debt management. The fiscal deficit, financed by the domestic market, dropped to 3.6% of GDP in 2019 and should fall to 3.3% in 2021 with better fiscal performance and spending controls. The debt of state-owned enterprises was estimated at 16% of GDP in 2018.
The restructuring of the debt portfolio with the GCC, which represented 4% of the treasury’s outstanding debt in 2018, is being expedited to limit the effects on currency volatility.
As a result of stronger real GDP growth, treasury debt, estimated at 65.3% of GDP in 2018, should fall to 65.1% in 2019, and to 63.1% in 2021. The current account deficit, 5.5% of GDP in 2018 due to the oil bill and capital goods imports, should fall gradually from 4.6% in 2019 to 3.9% in 2020 and 3.7% in 2021. Inflation is projected at about 1.0% for 2020–21.
Tailwinds and headwinds
The medium-term outlook remains positive, and real GDP growth should rebound to 3.7% in 2020 and reach 3.9% in 2021.
The country’s location can serve as a strategic hub for foreign companies looking to operate or set up business in Africa. The amended law on public–private partnerships and the advanced regionalization policy offer new investment opportunities. But the agricultural sector’s strong dependence on the climate could be a drag on growth.
The country faces three major structural challenges. First is developing human capital through education and training that correspond to the needs of the private sector. Second is rationalizing and optimizing the social protection system, which costs 3% of GDP, compared with 2% in other middle-income countries. And third is removing rigidities in the labor market to reduce youth unemployment.
Opening trade and services still controlled by state-owned enterprises to the private sector would promote competitiveness and reinvigorate the productivity of labor and capital inputs. And strengthening governance would increase the effectiveness of public activities and reduce spatial inequalities.