The Moroccan economic activity has recovered most of the ground lost during the severe global recession of 2020, said the International Monetary Fund (IMF), which projects a GDP growth at around 3% in 2022 “as agriculture output returns to average levels and non-agricultural activity continues to recover”.

“This performance owes to continued fiscal and monetary stimulus, the rebound of exports, buoyant remittances, and the exceptional harvest following two years of drought”, the financial institution pointed out in a release, after its Executive Board concluded the Article IV consultation with Morocco.

“After shrinking by 6.3 percent in 2020, GDP is forecast to have grown by 6.3 percent in 2021, among the highest in the Middle East and North Africa region”, it said.

Moroccan banks have weathered the crisis well, thanks to the prompt and exceptional support from Bank al-Maghrib, according to the same source.

“Despite having recovered most of the jobs lost in 2020, the unemployment rate of 11.8 percent is still above pre-pandemic level, driven by a rebound of the participation rate”, the IMF noted.

GDP growth is projected at around 3 percent in 2022, as agriculture output returns to average levels and non-agricultural activity continues to recover, it added.

“Recent inflationary pressures have remained manageable and are expected to wane in the medium term, as cost pressures from global supply disruptions are reabsorbed”, IMF pointed out.

After the sharp contraction in 2020, the current account deficit is projected to return in 2021 to levels closer to before the pandemic and to stabilize around 3.5 percent of GDP over the medium term, the IMF said, adding that while this outlook remains subject to uncertainty, with much of the risks depending on the evolution of the pandemic, a fast and effective implementation of structural reforms should increase growth over the medium term.

“After a strong compression in 2020, the current account deficit is returning to levels closer to pre-pandemic”, it said, adding that “Morocco has emerged from the crisis with a much stronger international reserve position”.

“Morocco’s economy is rebounding from the 2020 recession, thanks to the exceptional harvest, the rebound of exports, accommodative monetary and fiscal policy stances, and the continued strength in remittances”, the release pointed out.

The IMF Staff also welcomed the authorities’ commitment to a new wave of structural reforms.

“The generalization of the social protection system should remove existing gaps in coverage and quality of health care services and strengthen Morocco’s social safety net”, the press release read.

“Together with the full implementation of the Unified Social Registry, these reforms should improve inclusiveness and efficiency”, IMF stressed.

“Reforming SOEs should reduce their financial burden on the budget and remove distortions that prevent market neutrality and hinder private sector development”, according to the same source.

The IMF also noted that “the New Model of Development (NMD) contains several useful recommendations for strengthening the competitiveness of Moroccan firms, improving governance, boosting human capital, and building a more inclusive society”.