Morocco Faces Steepest Economic Decline in 25 Years Amid COVID-19 Crisis

The upturn of the last 20 years is over. The coronavirus has produced a sudden shock on the Moroccan economy, which has caused an unprecedented sharp recession.

"Real GDP is expected to contract by 4% in 2020 in the baseline scenario, which contrasts sharply with the 3.6% expansion expected before the epidemic. Few sectors have been spared, but the contraction is mainly due to a decline in goods and services production, a decline in exports, disruption of global value chains, as well as a decline in tourism due to travel restrictions and border closures," notes the World Bank, adding that an extension of containment measures will have a negative short-term impact on real GDP growth.

"The combined negative effects have led to widespread job and income losses. Government assistance has partially offset the 19% loss of households," said the Bretton Woods institution, predicting a current account deficit of 8.4% in 2020. A deficit that reflects a sharp drop in export earnings and tourism as well as transfers. The World Bank states that the overall budget deficit is expected to widen to 7.5% of GDP in 2020, nearly 4 percentage points more than expected before covid-19. Similarly, public debt, including external debt, is expected to increase but remain sustainable.

The institution also notes that the Moroccan government’s proactive response has allowed the country to avoid a massive epidemic and save lives. "Faced with the risk of a prolonged pandemic, moving from a mitigation phase to an adaptation phase is the key to ensuring a resilient, inclusive and growing Moroccan economy. Despite the likely volatility of the economic recovery phase, Morocco has the opportunity to build a more sustainable and resilient economy by developing an adaptation strategy similar to its approach on the environmental front," concludes the World Bank.