Morocco’s Economic Growth Slows to 3.2% as Omicron Measures Impact Recovery

After experiencing a rebound of over 6% growth in 2021, the Moroccan economy will experience a slowdown this year, according to the New York agency Fitch Solutions, in a recent note on economic forecasts for Morocco. The Kingdom is suffering the consequences of the measures taken to deal with the Omicron variant. "From December 1 to January 31, the government closed borders to international travel, and limited the capacity of enclosed spaces, which will hurt household consumption and the recovery of the tourism industry, which represents about 15% of Morocco’s GDP," the authors of this note observe.

However, the agency points out that certain aspects such as government support characterized by a "favorable" fiscal policy to stimulate private consumption "will remain the main driver of growth in 2022". This includes, among other things, the "Awrach" program, launched by the Head of Government, Aziz Akhannouch, and to which an amount of 2.25 billion dirhams has been allocated. This program aims to create 250,000 direct jobs on temporary construction sites, during this year 2022 as well as in 2023.

As for the "Forsa" program, it will allocate 1.25 billion dirhams to the expansion of SMEs. "These initiatives will lead to sustained hiring, with positive spillover effects on household spending." Another point raised by the agency is the support for investment. By tripling its allocation to the Mohammed VI Fund for Investment, from 15 billion dirhams to 45 billion dirhams, "the government will continue to issue debt to finance the development of highly capital-intensive projects, such as the port of Dakhla, estimated at 13 billion dirhams."

The Moroccan economy should also rely on strong foreign demand for products made in Morocco. "While we expect strong import growth in the coming months, driven by capital imports and strong domestic demand, this will be offset by stronger export growth," Fitch predicts.

Fitch Solutions points out that nothing is set in stone. Everything can change with certain indicators. "Good rainfall in the coming months could even allow Morocco to witness another fertile harvest season in 2022 after that of 2021." But the uncertainty around the evolution of the Omicron variant will always have to be reckoned with, which could lead to the strengthening of restrictive measures over a long period. "Such a scenario would penalize both domestic consumption and the recovery of tourism. In this case, GDP growth in Morocco will fall below 3%," the agency warns.