The African Development Bank expects Morocco’s economy to grow by approximately 3.3% this year as the country recovers from the previous year’s drought season. This prediction comes in parallel with expectations for further growth, to reach 3.5% next year.
This forecast aligns closely with the Moroccan government’s economic outlook, which targets a growth rate of 3.4% instead of the initially projected 4% in the 2023 finance law. It signals the government’s optimism and commitment to a steady and sustainable economic recovery.
According to the 2023 economic outlook for North Africa, announced by the African Development Bank, inflation in Morocco is predicted to record an annual rate of 5.4% this year, dropping to 3.6% next year. This inflation rate reflects the effects of the Russian-Ukrainian crisis on global prices, as inflation in Morocco hit 6.6% last year, compared to 1.4% in 2021 and an average of 0.9% between 2014 and 2020.
Data released by the African Development Bank highlighted that Morocco had recorded the lowest inflation rates in North Africa in recent years. However, last year’s unprecedented rise led Bank Al-Maghrib, the country’s central bank, to adopt a cautious approach towards interest rates.
Regarding the budget deficit, it is expected to end this year at approximately 4.6%, then decrease to 3.9% next year with the initiation of tax reforms, expansion of the tax base, and improvements in tax administration that would lead to increased revenues.
On the regional level in North Africa, the African Development Bank announced that growth will reach 4.6% in 2023 and 4.4% in 2024. The growth in the region will be primarily driven by the services sector, particularly trade and tourism.
The African Development Bank highlighted significant variations in growth increases between countries. Audrey Verdier-Chouchane, the bank’s Regional Economist for North Africa, stated that “supporting inclusive growth should be achieved by implementing structural reforms that enhance private sector development, improve productivity, employability, and create job opportunities”.
Inflation in the region is expected to continue, reaching double-digit rates of 14.2% in 2023, then falling back to 6.9% in 2024. The regional budget deficit is expected to remain around 3.5% of GDP in 2023 and 3.2% in 2024.
To safeguard the region’s economies, the African Development Bank calls for coordinating monetary and fiscal policies to tackle rising inflation and protect small businesses and individuals through targeted public spending.
The Bank’s report emphasized that maintaining and supporting food security in the region is a crucial goal, requiring investment in agriculture, including the development of improved varieties, water and soil management strategies. The region needs to enhance its resilience, especially in the context of the “energy transition – water management – food security” nexus.
