Sustained implementation of a diversified and ambitious reform program will be essential for the Moroccan economy to achieve broad-based growth and job creation, recommends a World Bank report on the economic situation in Morocco.
The report released on Wednesday, analyzes the growth performance of the Moroccan economy over the past decades.
“Until now, the accumulation of fixed capital has been the main engine of growth, with limited productivity gains and an insufficient contribution from the labor force, despite a favourable demographic situation,” the World Bank says.
The report presents simulations reflecting the impact of various policy options on economic growth in Morocco.
According to these simulations, the sustained implementation of a broad reform program, aimed at strengthening human capital, economic participation and business productivity, will be crucial to achieving the ambitious growth targets set by the New Development Model.
For the financial institution, such a program will help unlock Morocco’s productivity potential, allow youth and women to enter the labor market, and improve the training profile of workers.
The report also analyzes the performance of the Moroccan economy in 2021, which showed a projected growth rate of 5.3 percent.
An exceptionally strong performance by Morocco’s agricultural sector, a temporary setback from the pandemic, the revival of external demand for industrial and agricultural exports, and favourable macroeconomic policies are the main drivers of a strong but uneven recovery from the Covid-19 crisis.
According to the World Bank, the ongoing recovery is beginning to reverse the social impact of the pandemic.
This year’s rebound in agricultural production has led to a rapid decline in unemployment in rural areas, while in urban centres labour market indicators only began to rebound in the third quarter of 2021, the report says.
After peaking at about 6.4 percent in 2020, poverty rates could wait until 2023 before returning to 2019 levels, despite the effects of government cash transfer programs initiated during the lockdown, the World Bank report adds.
But the World Bank is less optimistic about 2022.
“After bumper harvests in 2021, agricultural production is expected to contract slightly going forward, contributing to a slowdown in GDP growth to 3.2 percent in 2022, before an expected gradual recovery,” it concludes.