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Growth in Morocco estimated at 1.1% in 2022
In its new report on the MENA region, this Thursday, April 14, the World Bank forecasts growth of 1.1% in 2022 in Morocco, a slowdown compared to last year.
Agricultural production is expected to decrease by 17.3% due to the drought. The economy should be driven by a still solid but moderate industrial performance and a faster recovery in tourism. Ongoing reforms should increase potential growth in the medium term, the institution says.
Furthermore, the budgetary impact of the health and social protection reform and the pressures on the compensation fund will slow down the consolidation of the budgetary deficit (6.2% of GDP in 2022). Public debt should stabilize below 80% of GDP.
The current account deficit is expected to widen to 5.5% of GDP due to the rising energy and food import bill.
A weaker recovery could put further pressure on the debt servicing capacity of households and businesses. Inflationary pressures could force the central bank to raise rates, which, together with changes in the monetary stance of advanced economies, would tighten public and private sector financing conditions.
Rising prices and falling farm incomes are expected to slow the post-covid normalization of socio-economic conditions. Poverty and extreme poverty are expected to stagnate at best in 2022 and will not return to pre-coronavirus levels until 2023.
Given the inflationary pressures, especially for food and energy products, as well as the effects of the severe drought, measures to support the most vulnerable as well as the planned broader social dialogue will be important steps for the government to take.