Morocco Grapples with Economic Fallout as Ukraine War Drives Wheat Prices Higher

By lifting some restrictive measures including the closure of borders, Morocco hoped to be able to turn the page on the health crisis and give itself a chance to revive its economy. But with the Russian invasion of Ukraine, the kingdom finds itself exposed to rising prices, increasing deficits and deepening public debt.

"Due to the Russian naval blockade, the Black Sea ports through which most of Russia’s and Ukraine’s cereal exports transit are disrupted. Shipping companies have voluntarily ceased their activities due to the reluctance of insurance companies to cover the risk," reports lopinion.ma.

According to some experts, the situation is likely to worsen if, in reaction to Western sanctions, Russia uses the weapon of cereals and if Ukrainian farmers are forced to reduce their production. In addition to the consequences of the Russian-Ukrainian crisis, Morocco must face the fallout from one of the worst droughts the country has experienced in thirty years.

A recent estimate made by the Policy Center for the New South (PCNS) indicated that the war should cost Morocco between 1% to 2% of its national income. "Energy products account for nearly 12% of the total import bill and wheat for more than 3% in normal times. It will explode as the prices of these products are tripling," say Moroccan economists who foresee much more serious consequences.

It must be said that the conflict in Ukraine has come to reinforce a tense social situation marked by protests against the rise in prices of certain products in Morocco. According to the newspaper, the government will continue to subsidize basic necessities such as gas, sugar, and soft wheat, even if the bill will be high. But this is the price to pay to relieve the population who hoped for a moment of respite after two years of fighting the Covid-19 pandemic.

Regarding the rise in fuel prices, the government has started negotiations this week with professionals in the transport sector with a view to granting them subsidies.