Morocco’s Informal Economy Shrinks to Below 30% of GDP, Study Shows

The results of the study show three distinct periods of evolution of the informal economy. During the first period from 1988-1998, the informal economy was around 40% of GDP. Between 1999 and 2008, it fell to 32-34% of GDP and during the last period of 2009-2018, the informal economy reached a level just below 30% of GDP. This implies that the strategies implemented since the early 2000s to renovate the institutional, economic and financial environment have contributed to reducing the size of the informal economy, estimated Kamal Lahlou, Hicham Doghmi and Friedrich Schneider, authors of the study.

However, it is important to undertake additional structural reforms regarding the persistence of significant informal activities, including those related to education, the judicial system, fiscal policy and the labor market, the researchers suggested, stressing that no single or isolated policy can lead to a significant regression of the weight of the informal sector. Thus, "a formalization strategy should include integrated reforms that address the complexity and peculiarities of informality in each sector," they added.

In addition to structural reforms, it is necessary to implement other measures that can promote the integration of the informal sector, mainly the strengthening of coordination and monitoring of policies aimed at the shadow economy. It is also necessary to develop the capacities and processes of the tax administration for more targeted tax audits, the collection of taxes and social security contributions by a single tax administration, the development of tax incentive measures, the organization of public awareness campaigns on the benefits of declared work, the strengthening of the digitalization of the public administration, the authors of the study suggested.