Morocco’s Economy Struggles to Rebound as Tourism and Exports Falter Amid Pandemic

In its recent economic outlook note, BNP Paribas has provided an overall assessment of the Moroccan economy in the first half of this year.

Taking all parameters into account, the agency recalled that the kingdom experienced a desert crossing mainly due to the collapse of its tourism sector activity and the decline in European demand (around 70% of exports).

In detail, the note indicates that Morocco is one of the countries in the North Africa Middle East region that has suffered the most from the consequences of the pandemic. The recession reached 6.3% of GDP in 2020. The shocks have been multiple.

Aggravating factor, agriculture has also suffered from unfavorable weather conditions. Unlike previous recession episodes in 2020, the drop in activity has therefore been general with a contraction of agricultural and non-agricultural GDP of 8.6% and 6% respectively, the note specifies.

This led S&P and Fitch to relegate Morocco to the speculative category, despite the authorities’ reaction to the shock of the pandemic, it is noted.

However, the note assures, the efforts to contain the pandemic are bearing fruit. Virus circulation is low again after a peak at the end of 2020 and Morocco has embarked very early on its vaccination campaign.

And to add that the Moroccan economy is not expected to regain its pre-pandemic level before 2022. Beyond the short-term risks, the crisis has also highlighted structural weaknesses that will need to be corrected.

While the announcement of several reforms is in the right direction, their implementation proves all the more important as the state will have to clean up its public finances. In the short term, however, budgetary and monetary leeway remains comfortable, concludes the note.