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Morocco’s economy has demonstrated remarkable resilience in the face of important global challenges, according to recent reports from the World bank and the African Growth bank. Despite a global economic slowdown, inflationary pressures, and the impact of a major earthquake, the Moroccan economy has shown surprising strength.
in 2023, the Moroccan economy expanded by 3.4 percent, exceeding initial projections. This growth is attributed to a revival in agricultural activities and services, coupled with a moderate recovery in domestic demand. The World Bank’s latest economic monitor highlights this positive trend, stating, “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.”
Strategic Monetary Policy and Economic Stability
The bank Al-maghrib (BAM), Morocco’s central bank, has played a crucial role in navigating these economic currents. A key rate reduction to 2.50% in December 2024, mirroring its level at the end of 2022, signals a commitment to fostering economic recovery.This move is justified by easing inflationary pressures,wich peaked at 10% in February 2023 but have since fallen to 0.7% in October 2024, thanks to a combination of BAM’s actions and government initiatives. Projections for 2025 anticipate headline inflation at 2.4% and underlying inflation below 2%.
Investing in the Future: Infrastructure and Growth
Lower interest rates are expected to have a significant positive impact.Reduced interest charges for the Treasury will free up fiscal space for crucial public investments. Morocco is undertaking aspiring projects, including post-earthquake reconstruction, the energy transition, and preparations for the 2030 World Cup. These initiatives require significant resources, estimated at approximately 1.7 trillion dirhams (approximately $170 billion USD) between 2025 and 2030 – a sum equivalent to 1.2 times Morocco’s GDP.Furthermore, lower financing costs should stimulate private investment, a key driver of projected economic growth of 3.9% in 2025, compared to 2.6% in 2024.
The Research Office estimates that the two key rate reductions in 2024 saved the Treasury an annual interest charge of around 620 million dirhams (approximately $62 million USD).
Global Alignment and future Outlook
Morocco’s monetary policy aligns with global trends. major central banks, including the European Central Bank (ECB) and the Federal Reserve (Fed), have also begun reducing their key rates. This international coordination provides Morocco with an chance to adjust its rates without jeopardizing its currency’s competitiveness. However, potential risks remain, including climate-related hazards, social dynamics, and the ongoing gas price adjustments, which could create localized inflationary pressures. BAM will need to balance economic support with vigilance against overheating.
Current indicators suggest that BAM may have further room to lower its key rate in 2025, solidifying a sustainable and balanced economic recovery for Morocco.
## Morocco’s Economics: Navigating Global Turbulence and Charting a Course for Growth
Despite a challenging global economic landscape marked by a slowdown, inflated costs, and the devastating impact of a major earthquake, Morocco’s economy has exhibited surprising resilience. Recent reports from the World Bank and the African Growth Bank highlight this remarkable strength, painting a picture of an economy poised for continued growth.
Interview with Dr. Fatima Zahra El Idrissi
Senior Editor of World-Today-News.com, Jane Thompson, speaks with Dr. Fatima zahra El Idrissi, an economist specializing in North African economies.
A Resilient Economy in Uncertain Times
Jane Thompson: Dr.El Idrissi, Morocco’s economic performance in 2023 has been remarkable, especially given global headwinds.Could you elaborate on the factors driving this resilience?
Dr. El Idrissi: Certainly, Jane. Morocco’s 3.4% growth in 2023 defied expectations, thanks primarily to a resurgence in agricultural activities and services. Domestic demand showed a moderate recovery as well. This positive trend reflects the Moroccan goverment’s proactive policies and the adaptability of the Moroccan economy.
The Role of Monetary Policy in Economic Recovery
Jane Thompson: The Bank Al-Maghrib’s (BAM) decision to reduce key interest rates twice in 2024 is noteworthy. How significant is this move for Morocco’s future economic prospects?
Dr. El Idrissi: The BAM’s actions are crucial. By reducing rates to 2.50%, they’ve signaled their commitment to supporting economic growth. This move is justified by easing inflationary pressures, which have fallen dramatically. lower interest rates will free up fiscal space for the government to invest in vital public projects and encourage private sector investment, a key driver of growth projected at 3.9% in 2025.
Investing in the Future:
infrastructure and Beyond
Jane Thompson: Morocco has ambitious infrastructure plans that require significant investment. How do you see these projects contributing to long-term economic growth?
Dr. El Idrissi: These projects are essential for Morocco’s future. From post-earthquake reconstruction to the energy transition and preparations for the 2030 World Cup, these investments will create jobs, boost productivity, and attract foreign investment. With estimated costs equivalent to 1.2 times Morocco’s GDP, these projects demonstrate a commitment to a sustainable and inclusive future.
jane Thompson: how does Morocco’s monetary policy align with international trends? Are there any potential risks on the horizon?
Dr. El Idrissi: morocco’s approach is aligned with global trends, with major central banks also easing rates. This international coordination helps prevent currency volatility. Though, potential risks remain, including climate-related hazards, social dynamics, and fluctuating gas prices. Sadly these are global challenges. BAM needs to carefully balance economic support measures with vigilance against inflation.
Jane Thompson: Dr. El Idrissi, thank you for sharing your insights into Morocco’s economic landscape.
