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publicationNovember 16, 2023

Morocco Economic Monitor Fall 2023: From resilience to shared prosperity

Morocco Economic Monitor MENA Nov 2023

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After a sharp deceleration in 2022 caused by various overlapping commodity and climate shocks, economic growth is set to increase to 2.8 % in 2023, driven by a partial recovery of agricultural output, services, and net exports.

This recovery is expected to firm up in the medium term, and real GDP growth is projected to reach 3.1 % in 2024, 3.3 % in 2025, and 3.5 % in 2026 as domestic demand gradually recovers from recent shocks. Inflation has halved between February and August 2023, but food inflation remains high and continues to disproportionally affect poorer households. 

Morocco has repeatedly demonstrated a strong capacity to respond effectively to shocks in recent years. The September 8 earthquake in Al Haouz is the last of a series of shocks that have struck Morocco since the COVID-19 pandemic. The quake had devastating human and material consequences localized primarily in remote mountain communities but is unlikely to have significant macroeconomic impacts.

Morocco's external resilience is also evidenced by a solid external demand for the country's goods and services, despite the international economic slowdown. Equally, Foreign direct investment inflows remain strong and increasingly directed towards the manufacturing sector. Various modern industrial niches well connected to global value chains have emerged and the country maintained access to international capital markets despite the ongoing tightening of global financial conditions.

Morocco has launched ambitious reforms to improve human capital and encourage private investment. These reforms will achieve the desired economic and social development impact only if, though, combined with other critical initiatives, including the removal of regulatory and institutional barriers that limit competition and slow the reallocation of factors of production to more productive firms and sectors.

Moreover, a paradigm shift is still needed to empower Moroccan women economically which will be necessary to meet the high ambitions of the country as expressed in the NDM. Beyond its importance in promoting gender equality, increasing Female Labor Force Participation (FLFP) would also have a significant economic impact and be a powerful driver of socioeconomic development. The report shows that meeting the NDM objectives of a 45 % FLFP could boost growth by almost one percentage point a year.