São Paulo – The economy of Morocco is expected to grow by 4.4% this year, the primary driver being a recovery of agricultural activity, as per a review of the country released by the International Monetary Fund after a staff mission which ended this Tuesday (7).
Agriculture accounts for roughly 13% of Gross Domestic Product (GDP) and employs nearly 40% of the national workforce. Products include barley, wheat, fruits, vegetables, olives, livestock and wine.
The IMF’s Nicolas Blancher, who led the two-week-long mission in Morocco, said recovery is expected since the country struggled with drought last year.
An IMF press release says the country is expected to run a current account deficit tantamount to 3.9% of GDP this year, driven by an increase in exports, which will offset low oil prices – the country is an oil products exporter – and sustained capital goods imports.
Blancher was quoted as saying that “In recent years, the Moroccan economy has benefited from the continuation of prudent macroeconomic policies and structural reforms. Improved fiscal management and diversification of the economy have strengthened its resilience,” although “much remains to be done.”
“Much remains to be done, however, to achieve higher, sustainable, and more inclusive growth,” he said, noting that unemployment among young people is close to 10% and going on to say that “significant structural reforms have been initiated, and it is necessary to accelerate their implementation in order to increase productivity gains and job creation.”
Blancher believes the priorities for the Arab North African country include improving its educational system and the functioning of its labor market, increasing female labor force participation, and strengthening ongoing efforts to improve the business environment.
Next year, Moroccan economic growth is poised to weaken, since numbers will be compared to the good results expected this year. In the medium term, however, as reforms continue to be rolled out, GDP is seen reaching 4.5%.
But the IMF’s forecasts are amenable to domestic and external risks such as “delays in implementing key reforms, weaker-than-expected growth in advanced and emerging market economies, world energy prices, geopolitical tensions in the region, and volatility in global financial markets.”
Next year, the IMF expects Morocco’s fiscal deficit to shrink to 3% of GDP through “revenue enhancement measures and expenditure containment.” Tax reforms are also expected to bring public debt down from 64.3% of GDP this year to 60% of GDP by 2021.
The IMF staff mission to Morocco is part of the third review of a Precautionary and Liquidity Line (PLL) loan arrangement that was agreed upon in July 2016. The USD 3.5 billion loan is being rolled out over a 24-month period leading up to the second half of 2018.
*Translated by Gabriel Pomerancblum
