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    World Bank: Morocco’s Response Saved Lives, Threatens Recession

    “The COVID-19 shock is, however, abruptly pushing the economy into a severe recession, the first one since 1995.”

    19 Jul 2020

    Rabat – The World Bank’s Morocco Economic Monitor report for July 2020 commends Morocco’s “swift and decisive” response to the COVID-19 pandemic. However, indicators show that the country’s life-saving measures came at a high cost for the economy, resulting in a looming recession.

    The report recognizes Morocco’s ongoing efforts toward socio-economic development across the country, highlighting “dramatic improvements towards eradicating extreme poverty; increased life expectancy, greater access to basic public services, and significant public infrastructure development.” Meanwhile, it notes that the pandemic could set the country’s economic development back amid years of progress.

    “The COVID-19 shock is, however, abruptly pushing the economy into a severe recession, the first one since 1995,” it reads.

    The World Bank expects both domestic and external shocks to impact Morocco’s economy. Prior to the pandemic, economists expected the country's real GDP would expand by 3.6%. Now, experts predict a 4% contraction in the baseline scenario.

    Contributing factors and recommendations

    “Few sectors have been spared but the contraction is primarily driven by a drop in the production of goods and services, a reduction in exports, disruption of global value chains, as well as a decline in tourism due to travel restrictions and border lockdowns.”

    The High Commission for Planning reports that government assistance has mitigated income loss for 19% of households. Still, the effects of lockdown, disruption of value chains, and worldwide temporary closures have slowed demand and resulted in widespread job and income losses.

    Sharp declines in tourism, exports, and remittances have rocked the economy. Increased expenditures to combat the negative effects of COVID-19 also factored in.

    “As a result, we expect the overall fiscal deficit to widen to 7.5 percent of GDP in 2020, almost 4 percentage points larger than projected pre-COVID-19. Both public and external debt are projected to rise but to remain sustainable.”

    It is clear that COVID-19 is making its mark beyond Morocco’s public health sphere. However, the World Bank notes that it projects post-pandemic economic recovery with “unusually large uncertainty.” It is possible that Morocco’s economic growth may not resume on trend until 2022.

    The United Nations organization suggests moving from mitigation techniques to pursuing policies and clear roadmaps that will allow the country to adapt to COVID-19. Finding ways to reshape Morocco’s socioeconomic landscape could hasten the country’s recovery and prevent further damage.

    “Faced with the risk of a protracted pandemic, moving from mitigation to an adaptation phase is key to ensuring a resilient, inclusive, and growing Moroccan economy.”

    Despite the threat of recession and a likely dragging economic recovery, the World Bank demonstrates confidence in Morocco’s ability to adapt. It referenced Morocco’s success in developing strategic measures in its environmental efforts. It also expressed that the country has the opportunity to build a more sustainable and resilient economy.


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