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Morocco’s economy forecast to grow 3%

Morocco economy Wikimedia Commons/Adam Jones
The medina in Meknes: An improved harvest and increase in tourism will help Morocco's economy, but its fiscal deficit is also set to worsen
  • Earthquake effect may reduce growth
  • Q2 unemployment down slightly at 12.4%
  • Fiscal deficit of 5.8% predicted

Morocco’s economy is forecast to grow by 3.1 percent this year, boosted by an improved harvest and increased tourist numbers, according to the European Bank for Reconstruction and Development.

However, the estimate does not take into account the earthquake that struck at the start of this month in the High Atlas Mountains near Marrakech, which destroyed infrastructure and killed more than 3,000 people.

The disaster prompted analysts at BMI, formerly Fitch Solutions, to cut GDP growth expectations for this year from 2.4 percent to 1.8 percent.

In its most recent regional economic report, the EBRD adopted a more optimistic outlook with the estimated growth of 3.1 percent, up from the 1.3 percent rate recorded in 2022 when a drought compounded the adverse impact of tighter global financing conditions.

“Growth is expected to reach 3 percent in 2024, reverting to pre-pandemic levels in the medium term, with accelerated momentum on reforms potentially improving the outlook further”, the report said.

Unemployment in the North African country fell slightly to 12.4 percent in the second quarter of 2023, with higher rates among women (17 percent) and youth (33.6 percent), and in urban areas (16.3 percent).

Abdellatif Jouahri, governor of Morocco’s central bank, said on Tuesday that it is still too early to judge the real impact of Al Haouz earthquake on the national economy.

“An in-depth analysis is being carried out to measure the impact of the earthquake on various sectors of activity,” he said.

Morocco’s fiscal deficit was expected to widen from 5.2 percent of GDP in 2022 to 5.8 percent this year. This is well up on the 10-year pre-pandemic average of 4.4 percent and had been attributed to higher capital spending – which is now set to increase even further.

“While reconstruction expenditure might provide a boost to medium-term growth, it might also increase the need for financing,” the EBRD report said.