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Rabat – Morocco’s economic growth is expected to accelerate to 3.1% in 2023, up from 1.1% in 2022, a recent report from the World Bank (WB) says.
After recording a strong post-pandemic recovery in 2021, Morocco’s economy stained under the weight of the consecutive supply shocks, the WB explains in the report. The severe drought and soaring commodity prices have recently pushed inflation to record-high levels.
Dubbed “Responding to Supply Shocks,” the report explains that Morocco’s economic growth is set to accelerate to 3.1% in 2023 supported mainly by the rebound in agricultural activities.
However, a number of risks persist including the geopolitical tension in Eastern Europe and the looming crisis over the European Union- currently Morocco’s largest trade partner.
Noting the effect of inflation on national purchasing power, the report says that vulnerable households suffered the most from the impact of soaring prices.
WB data shows that the annual inflation was almost “one-third higher for the poorest 10% of the population, compared to the wealthiest 10% of the population primarily due to the impact of food price increases which represent a higher share of spending in poorer households.”
At the end of 2022, the annual inflation rate reached 8.3%. Food prices were especially affected by inflation due to the lingering crisis in the international supply chain, and the ongoing drought.
To cushion the impact of rising food and energy prices on households, the country adopted a number of policies that included subsidies for staple commodities and regulating food prices.
According to the report, this approach “stabilized the prices of goods and services that absorb almost one-quarter of the average household´s expenditures,” and averted a higher increase in poverty. However, these policies came with a heavy price tag of almost 2% of the national Gross Domestic Product (GDP).
“Recent measures to counter supply shocks and preserve the purchasing power of Moroccan households have cushioned the impact to a significant extent and prevented more people from falling into poverty,” Country Director of World Bank Maghreb, and Malta, Jesko Hentschel said.
The new plan regarding the family allowance system “will allow Morocco to effectively target the vulnerable population in a cost-effective and equitable manner to address price hikes of this magnitude,” he added.
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