World Bank forecasts 2.8% growth in Morocco by 2023

The World Bank (WB) noted that "in recent years, Morocco has repeatedly demonstrated its strong capacity to respond effectively to crises. The Al-Haouz earthquake of 8 September is the latest in a series of disasters to hit Morocco since the COVID-19 pandemic. The country has successfully managed the humanitarian response to the earthquake and has put in place an ambitious development plan for the most affected provinces".  

"The earthquake has had devastating human and material repercussions, mainly in isolated mountain communities, without having major macroeconomic impacts," the WB said. 

Following a sharp slowdown in 2022 due to various climate changes and related commodity shocks, economic growth is expected to pick up to 2.8% in 2023, thanks to a partial recovery in agricultural production, services and net exports, according to the World Bank's latest report "From Resilience to Shared Prosperity". 

This recovery is expected to strengthen over the medium term and real GDP growth is expected to reach 3.1% in 2024, 3.3% in 2025 and 3.5% in 2026, while domestic demand will gradually recover from recent shocks. Headline inflation halved between February and August 2023, but food inflation remains high and continues to disproportionately affect the poorest households, the Bretton Woods institution warned. 

In his statement to the press, Jesko Hentschel, the World Bank's country director for the Maghreb and Malta, stressed that "Morocco has shown remarkable resilience in the face of several shocks, most recently the earthquake last September". "However, the impact of these shocks on the well-being of the population remains significant, and the reforms already planned by Morocco are necessary to strengthen the country's external resilience and, above all, to stimulate prosperity and achieve the ambitious development objectives defined in the New Moroccan Development Model," he continued.

The key is to strengthen the resilience of the Moroccan economy to remain able to face the new realities of today's world and to recover the losses of recent years shaped by the pandemic, the economic crisis and the last earthquake. In this context, Morocco has undertaken ambitious reforms to improve human capital and encourage private investment. However, "these reforms will only have the desired impact on economic and social development if they are combined with other crucial initiatives, in particular the removal of regulatory and institutional barriers that limit competition and slow the reallocation of factors of production to more productive firms and sectors," warned the World Bank. 

Morocco's strength lies in maintaining the state's access to international financial markets, despite the current tightening of global financial conditions, illustrating the Alawi kingdom's resilience. 

Other indicators of Morocco's external resilience include the country's strong external demand for goods and services, despite the global economic slowdown. Similarly, "foreign direct investment (FDI) flows remain strong and are increasingly oriented towards the manufacturing sector, while new modern industrial niches have emerged, closely linked to global value chains," the WB praised. 

Moreover, Morocco must continue on its path towards a paradigm shift to enable the economic empowerment of Moroccan women, a crucial step in achieving the country's important ambitions as expressed in the New Model of Development (NMD). The main focus of these reforms is to improve the living conditions of rural women.

In this regard, the World Bank report also urged the importance of taking into account the obstacles faced by women in rural and urban areas, such as mobility, financial and digital inclusion and working conditions. 

Beyond their crucial role in promoting gender equality, increasing women's participation in the labour market would have a significant economic impact, thus constituting a powerful driver of socio-economic development. The report highlights that achieving the NMD targets of 45% female labour market participation could stimulate growth by almost one percentage point per year.