Morocco’s economy springs back after 2016 drought

16 Décembre 2017

Rabat, Morocco, December 16  (Infosplusgabon)  - After last year’s drought, Morocco’s economic growth has picked up in 2017 and is expected to reach 4.4 percent, mostly driven by a significant rebound in agricultural activity while non-agricultural activity remains subdued, according to the International Monetary Fund (IMF).

In its assessment, the IMF Executive Board has commended Moroccan authorities for the sound macroeconomic policies and reform implementation that have helped improve the resilience of the economy, upgrade the fiscal and financial policy frameworks, and increase economic diversification.

To consolidate the gains achieved and promote higher and more inclusive growth, the IMF Directors underscored the need to maintain sound fiscal and monetary policies and to step up structural reform efforts, supported by measures to strengthen the social safety net.

According to a statement issued on Friday by the IMF, the Directors’ assessment followed their conclusion of 2017 Article IV consultation with Morocco and they welcomed the resumption of fiscal consolidation to ensure the country’s debt sustainability.

Also, they supported efforts to control spending on wages and goods and services to create fiscal space for priority spending in the medium term.

Following a marked deterioration in 2016, Morocco’s current account deficit is projected to improve in 2017 to 3.9 percent of GDP. This primarily reflects the country’s global environment, particularly the stronger recovery in Europe, and strong export growth (6.5 percent), mostly due to the good performance of food product and phosphate and derivatives exports.

The unemployment rate, however, increased to 10.6 percent in Q3 2017 (year-on-year) while youth unemployment remains high at 29.3 percent. Headline inflation (year-on-year) is expected to decline to 0.6 percent in 2017, reflecting lower food prices.

Noting that inflation was likely to remain moderate while the accommodative monetary policy allowed for continued credit recovery, the Directors supported the Moroccan authorities' intention to move to a more flexible exchange rate regime and a new monetary policy framework, which will help the economy to absorb external shocks and remain competitive.

Emphasizing the importance of sustained implementation of broad based structural reforms, the Directors added that continued efforts to strengthen the business environment, including through better governance, improved education and vocational training, will be key to reduce unemployment, especially among the youth, and to increase women's participation in the labour force.

FIN/INFOSPLUSGABON/IOP/GABON 2017

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