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Saturday, December 10, 2022

Morocco: Growth Expected at 1.3% in 2022 (WB)

The growth of the Moroccan economy is expected to reach 1.3% in 2022, compared to 7.9% in 2021, said, Wednesday, the WB’s Senior economist in Morocco, Javier Diaz Cassou.

After a strong recovery in 2021, the Moroccan economy is facing the effects of the global economic slowdown, a severe drought, the repercussions of the international geopolitical context and increasing inflationary pressures that will probably lead to a significant slowdown in growth in 2022, explained Diaz Cassou during the roundtable dedicated to the presentation of the Monitoring Report of the economic situation in Morocco – The economic recovery is running dry.

He pointed out that the current shocks are affecting the budgetary and external balances, noting that the subsidies on butane, electricity and wheat prices and the various emergency measures adopted are mitigating the impact of shocks on households.

As a result, the fiscal deficit is rising, although Morocco still has better fiscal indicators than most emerging and developing economies, Diaz Cassou said, adding, however, that Morocco is beginning to face intense inflationary pressures, but still somewhat more moderately than in other countries.

Recent droughts have been a stark reminder of the Moroccan economy’s exposure to rainfall shocks. The new drought experienced by the Moroccan economy this year, one of the most severe, has damaged growth prospects in 2022, he said.

Diaz Cassou stressed the structural nature of the water shortage that Morocco will have to face in the context of climate change, noting that the succession of drought periods in recent years “suggests that we are no longer facing rainfall shocks like those of the past, but a problem of structural water stress that could cause major economic losses in the coming decades”.

The development of infrastructure is a necessary but not sufficient condition to cope with this structural water shortage, he said, advocating the need to invest massively in water storage and irrigation and to combine, following the example of international experiences, effective water demand management policies with “engineering solutions” to deal with the shortage.

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