The World Bank in a new report stated that Morocco’s economic growth is expected to accelerate to 3.1% in 2023, thanks to a rebound of the primary sector.
The report “Responding to Supply Shocks” revealed that the country’s real GDP growth dropped from 7.9% in 2021 to an estimated 1.2% in 2022, while the current account deficit increased from 2.3% to 4.1% of GDP.
The war in Ukraine, combined with the reordering of global supply chains, have triggered, as in much of the world, a surge in prices, with Moroccan annual inflation peaking at 8.3% towards the end of 2022.
To soften the impact of food and energy prices on households, Morocco adopted a policy package that included general subsidies on staples and maintained pre-existing regulated prices.
This approach stabilized the prices of goods and services that absorb almost one-quarter of the average household´s expenditures, avoiding what could have been a higher increase in poverty. It required the mobilization of additional public spending amounting to almost 2% of GDP.
The report calculates that annual inflation was almost one-third higher for the poorest 10% of the population, compared to the wealthiest 10% of the population primarily due to the impact of food price increases which represent a higher share of spending in poorer households.
“Recent measures to counter supply shocks and preserve the purchasing power of Moroccan households have cushioned the impact to a significant extent and prevented more people from falling into poverty,” Jesko Hentschel, World Bank Maghreb and Malta Country Director said.
“The planned roll-out of the family allowance system will allow Morocco to effectively target the vulnerable population in a cost-effective and equitable manner to address price hikes of this magnitude.”