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publication December 23, 2020

Morocco Economic Monitor, Fall 2020: From relief to recovery


The Morocco Economic Monitor (MEM), a semi-annual report from the World Bank economic team, presents recent economic developments and economic policies. This December 2020 MEM issue includes a chapter on the impact of the pandemic on the formal private sector. It presents the results of the Enterprise survey which was conducted on more than one thousand firms before and after the onset of the pandemic and discusses various measures that could contribute to accelerate the recovery.

Although the Moroccan economy exhibits some signs of recovery, the situation remains fragile given that epidemiological trends are worse now than they were during the first wave of contagions. In this uncertain context, real GDP is expected to contract by 6.3 percent in 2020, and to return to its pre-pandemic level only in 2022. As in much of the world, the current crisis will lead to a considerable increase in the budget deficit, which will reach 7.8 percent GDP in 2020, and public debt could surpass 76 percent of GDP. The current account deficit is also expected to increase to 6 percent of GDP this year. 

The Moroccan authorities have put forward an ambitious recovery strategy. The government intends to mobilize close to 11 percent of GDP in the form of loan guarantees, direct equity injections in Moroccan corporates, and to give a new impulse to infrastructure-related Public-Private-Partnerships. To this end, a new strategic investment fund is being created, and the Central Guarantee Agency is being transformed into a limited company. In addition, various important structural reforms have been announced, including the generalization of health insurance, a revamping of the social protection system around a universalization of family allowances, the streamlining of Morocco’s large network of State-Owned Enterprises (SOEs) and a number of measures to especially support the SME sector in the recovery.

The follow-up Enterprise Survey conducted by the World Bank in Morocco after the outbreak, provides new evidence on the large and persistent impact that the COVID-19 pandemic is having on the formal private sector. Among its most relevant results, 6.1 percent of surveyed formal sector firms are reported to have ceased their operations, and as many as 86.9 percent report a fall in sales of, on average, 50.4 percent of their pre-pandemic level. The survey also provides information about the coping strategies of Moroccan enterprises, which includes a growing use of the government’s lines of support, a reduction in the number of worked hours (but, comparatively, less lay-offs than in other countries), the use of internal funds to meet cash flow shortages, and increasing business activity online.