Morocco’s New Government Faces Economic Hurdles: Post-COVID Recovery and Job Growth

The new government will face old economic challenges: stimulating the Moroccan economy and ensuring a post-Covid-19 recovery, reports the Emirati website Zawya.com. International Monetary Fund data indicate that the Moroccan economy plunged 7.2% in 2020 and that GDP should rebound by 4.5% this year and record an annual growth rate of less than 5% until at least 2025. In 2019, economic growth had slowed to less than 3% with structurally high unemployment. In its report, the High Commission for Planning (HCP) specified that GDP gained 1% in the first quarter, suggesting that the economy will need more stimulus.

According to the Moroccan Directorate of Financial Studies and Forecasts, tourism revenues - one of the main foreign exchange generators - fell by 58.1% in the first half to reach $1.35 billion. "Unlike Brazil or Russia, it would seem that savings in Morocco have never been wiped out by hyperinflation or deep economic shocks," said Charles Robertson, an analyst at Renaissance Capital. "High domestic savings mean that the loan-to-GDP ratio in Morocco is much higher than in many emerging countries at 97% of GDP without foreign financing," he explains.

The future government will have to follow in the footsteps of the outgoing executive by continuing the reform program implemented as part of the post-Covid-19 recovery. The three main pillars of this program are: the creation of a Strategic Investment Fund (the Mohammed VI Fund) to support the private sector, the overhaul of the social protection system to strengthen human capital, and the restructuring of the vast network of Moroccan state-owned enterprises. It will also have to work on the new development model that strongly emphasizes human development and gender equality, and the need to promote private entrepreneurship and boost competitiveness.

The government led by Aziz Akhannouch will also have to continue to adapt to the decline in Gulf support, further develop the automotive sector, strengthen its solid trade relations with EU states, its infrastructure and its favorable business environment, etc.