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Rabat – “The outlook for the Moroccan economy is expected to improve in the mid-term,” says the World Bank in its latest report on the economic situation in the Middle East and North Africa (MENA) region.
The economy is expected to improve in the mid-term, “provided the next government is willing to pursue prudent macroeconomic policies and implement structural reforms to strengthen the business environment, modernize public administration and improve access to quality public services, among others,” according to the report, which was presented Monday at a meeting organized in Rabat in collaboration with the think tank OCP Center.
The report stresses that the gradual shift to a more flexible exchange rate regime recently announced by Bank Al-Maghrib should also contribute to strengthening Morocco’s competitiveness, adding that the planned implementation of the organic finance law and the decentralization process should strengthen the governance and effectiveness of the public sector.
Overall, annual GDP growth is expected to reach its current potential of 4 percent on average, the WB believes, and heavy rainfall since autumn 2016 suggests that GDP growth should rebound to 3.8 percent by 2017.
Experts at the international financial institution are expecting cereal production to exceed historical averages to an agricultural GDP increase of almost 10 percent.
The report also foresees an increase in non-agricultural GDP, which, “benefiting from the improvement in the agricultural sector and the growing confidence of both consumers and producers, would be slightly higher than recent trends.”
However, “this positive outlook is unlikely to translate into significant improvements in the structure of the labor market,” says the Bretton Woods institution, which expects inflation to be around 2 percent.
The anticipated increase in world oil prices will contribute to a deterioration in the current account balance, but as is customary, external financing needs “do not pose a major risk”, given the relatively low level of external debt and the country’s access to international markets. It added that the IMF’s second Precautionary and Liquidity Line (LPL) will continue to provide coverage against external risks.
Initiated by the WB in collaboration with the OCP Policy Center think tank, the launch of the latest issue of the Monitoring Report on the Economic Situation in the MENA Region highlights the economic challenges faced by the countries of the region and their macroeconomic prospects terms.
The pursuit of prudent macroeconomic policies has enabled Morocco to reduce external and fiscal imbalances in recent years, “coupled with robust budgetary management and financial control, the completion of the reform of subsidies in 2014 has helped further reduce the budget deficit to an estimated 3.9 percent of GDP by 2016 and stabilize debt at 66 percent of GDP,” concluded the report.
