Despite various obstacles, including a slowdown in the global economy, an inflation shock, and the Al Haouz earthquake, the Moroccan economy has shown resilience and has accelerated, with real output increasing by 3.4 percent in 2023, according to the World Bank's latest economic monitor for the country.
Growth was driven by a rebound in tourism, strong performance in export-oriented manufacturing sectors such as automobiles and aeronautics, and a resurgence in private consumption. Supportive macroeconomic policies, including public sector expansion and fiscal consolidation strategies, have contributed to this economic acceleration. Morocco has also seen a substantial increase in foreign direct investment, which present significant development opportunities, and a decline in the current account deficit to its lowest level since 2007.
However, the Moroccan economy faces challenges as firms and households struggle to recover from recent shocks, evidenced by a rise in business insolvencies and a labor market that lost 200,000 jobs in rural areas in 2023 despite the economic acceleration. Per capita consumption has barely returned to pre-pandemic levels, and a new social aid program is expected to aid the most vulnerable households. Looking ahead to 2024, economic growth is projected to decelerate to 2.9 percent due to a weak agricultural campaign, but non-agricultural GDP is expected to remain resilient.
"This report highlights the crucial role of productivity in enhancing a country's economic growth and standard of living, in alignment with the New Development Model (NDM) and Morocco's long-term inclusive development vision," said Ahmadou Moustapha Ndiaye, World Bank Maghreb and Malta Country Director. "The country has made significant progress recently, including the operationalization of the Competition Council, amendments to the Competition Law, and a landmark antitrust settlement with fuel distributors. To build on these advancements, and as highlighted in the NDM, continued efforts will need to be made, particularly in support of small and medium-sized enterprises."
The report includes a special focus chapter on the dynamics of the Moroccan private sector, highlighting its productivity performance and the need to address constraints to improve job creation. It is based on an analysis jointly conducted with the Moroccan Observatory of Small and Medium Enterprises, which exploits a comprehensive database of formal firms.
The report - entitled "Unlocking the potential of the private sector to spur growth and job creation" - highlights the significance of micro-level data in understanding productivity trends and shaping policies for the private sector's performance in Morocco. It underscores the necessity of a dynamic business environment that encourages innovation and the reallocation of resources toward more productive firms to boost productivity growth. Additionally, it points out that the predominance of small firms and micro-enterprises in Morocco, which struggle to grow, contributes to the country's insufficient job creation for its expanding workforce. The report outlines the challenges and policy measures required to enhance productivity and growth in the formal private sector.
