Report: Morocco Grapples to Sustain Economic Growth Amid Rising Inflation

Rabat – Despite its “modest output” performance in 2023, Morocco’s economy continues to grapple with surging inflation, according to the 2024 World Economic League Table report.

Compiled by London-based Centre for Economics and Business Research (CEBR), the report contends that in 2023 Morocco, a lower-middle-income country, displayed a mixed bag of economic indicators.

With an expected PPP-adjusted GDP – Purchasing Power Parity-adjusted Gross Domestic Product – per capita of $10,408, the North African nation experienced a notable surge in growth from 1.3% in 2022 to a projected 2.4% in 2023.

PPP-adjusted GDP is a measure used to compare the economic productivity and standards of living between different countries by accounting for differences in price levels and cost of living.

The report argues that the current growth trajectory positioned the country’s output at a positive 4.0%, above 2019 levels.

However, the promising growth was coupled with concerning inflation figures. Inflation surged despite the economy’s modest performance, hovering at an anticipated 6.3%.

The surge sparked worries about a potential stagflationary trade-off, pitting growth against rising prices.

Stagflation describes an economy that is witnessing a stagnant economic growth (stagnation) and high inflation. It’s a situation where an economy experiences slow or stagnant growth in its Gross Domestic Product (GDP) coupled with rising prices or inflation.

The scenario is challenging as state economic policy responses that aim to stimulate growth have historically worsened inflation, and measures to control inflation are also likely to weigh on economic growth.

The estimated growth in consumer prices in 2023 surpassed the average inflation rate recorded in the decade leading up to 2021, standing at 1.0%.

In addition to inflation, one of the persistent challenges negatively impacting Morocco’s economic landscape has been the substantial portion of the labor force out of work.

The trend worsened in the past year, with unemployment rates expected to reach 12.0% in 2023, up 0.2% year-on-year.

Meanwhile, government debt is showing signs of recovery, with estimates suggesting that government debt as a share of GDP has dropped from 71.5% in 2022 to 69.7% in 2023, giving further momentum to the country’s fiscal stability.

Morocco’s economic outlook remains positive, the report maintains, with the annual rate of GDP growth projected to climb to an average of 3.4% between 2024 and 2028.

This positive outlook is expected to persist over the subsequent decade, with annual economic growth expected to average 3.4%.

Economists at the research center foresee a gradual but steady climb for Morocco in the World Economic League Table, which reflects economic performance. In particular, Morocco is projected to move slightly up in the rankings, going from 61st in 2023 to 60th by 2038.