In 2021, Morocco's economy showed growth. Nevertheless, real GDP is still below the pre-pandemic level. In general, it should be noted that the slowdown in economic growth has been observed since the 2010s. Frequent droughts and external shocks in the form of higher prices for energy and raw materials on the world market have been added to the negative trends. All this leaves the Moroccan economy quite vulnerable at the moment.
According to the IMF, Morocco's GDP growth was 7.2% in 2021, which was a good result after a 6.3% reduction in 2020. Such a significant growth was possible due to the harvest of agricultural crops after 2 dry years, high export demand, economic support from the state, as well as significant results in terms of the vaccination campaign of the population. Annual inflation remained at a low level of 1.4% throughout the year, but by the end of 2021 there was a tendency to accelerate price growth: the consumer price index in February 2022. It was at the level of 3.6% YoY against the background of increasing external shocks and another drought.
Experts predict that in 2022, Morocco's GDP growth will slow down to 1.1% due to a 17.3% drop in agricultural production. The key drivers of economic growth will be industrial production, as well as the rapidly recovering tourism sector.
The reforms carried out by the state will also have a positive impact in the medium term. Postponing the reform of the fuel and flour subsidy system to a later date will complicate the consolidation of the country's budget. At the same time, it can be expected that the public debt will not exceed 80% of the country's GDP in the near future.
According to forecasts, the current account deficit of the balance of payments will increase to 5.5% of GDP due to rising prices for energy and commodities on the world market.
It should be borne in mind that, taking into account the dominant negative trends in the global economy, the current indicators of the country may be revised downwards. High inflation risks may lead to a tightening of monetary policy on the part of the Moroccan financial regulator, which, in turn, will affect the possibilities of attracting financing for economic projects in both the public and private sectors.
In 2020, Morocco's GDP by PPP per capita decreased by 6.1% compared to the level of 2019, but in 2021 it increased by 10.5%. The inflation rate, according to the IMF, in 2021 was 1.4% compared with 0.6% in 2020. It is expected that in 2022 this indicator will grow to 4.4%, however, despite such forecasts, the Central Bank of Morocco has so far (July 2022) maintained its interest rate at 1.5%, clearly preferring not to slow down the Moroccan economy.
In the long term, climate change remains the main threat to the Moroccan economy. The well-being of a large number of people depends on the development opportunities of the country's agricultural sector and tourism, which are highly vulnerable to natural and climatic conditions. In addition, Morocco is a country experiencing an acute shortage of water, and agriculture consumes more than 80% of available water resources.
Launched in early 2020, the Green Generation 2020-2030 program is designed to increase the resilience of the agricultural sector to climate change, as well as to implement the following tasks: the emergence of a middle class in agriculture, the creation of a new generation of young entrepreneurs, including through the development of 1 million hectares of collective land and the training of 150 thousand young specialists to work in agriculture, increasing labor productivity in agriculture through the introduction of innovative methods, creating new support mechanisms by connecting at least 2 million farmers to digital services platforms, doubling exports of agricultural products, improving distribution channels for agricultural products, in particular through the modernization of wholesale markets and bazaars.
