After the economic growth amounted to 7.9% in 2021 as a result of the exceptional agricultural season and the recovery of non-agricultural activities by 6.6%, the results of the national accounts showed that the national economic growth registered a noticeable slowdown of 0.3% during the first quarter of 2022 instead of 2% during the same quarter of the previous year. Non-agricultural activities recorded an increase of 2.5% and agricultural activity decreased by 14.3%.
Economic complexity is a measure of the knowledge in society as expressed in the products it makes. The economic complexity of a country is calculated based on the diversity of exports a country produces and their ubiquity, or the number of the countries able to produce them. In Morocco, and given its current exports, some of the sectors with high potential for new diversification are articles of “iron or steel” and “industrial machinery”
Morocco’s economy is slightly more complex than expected for its income level since it has not yet started the traditional process of structural transformation. For instance, it broadly moves activities out of agriculture into textiles, followed by electronics and machinery manufacturing. Global market share in textile exports in Morocco has stagnated over the previous decade; electronics and machinery have yet to take off in Morocco, limiting its income growth. (See graph below)
Since 2007, Morocco has entered this new phase of orientation, from being agriculturally focused to shifting its focus toward the industrial sector, however, was it economically complex? The steps and measures discussed this summer might take time to bring their fruitfulness, and by the parliamentary entry, we are assuming to see actions taken to lift our complexity, as it is considered very important for Morocco, and plays a vital role in the economy since it allows the country to position itself as a valuable player in the global market by providing goods and services with added value.
source : Growth in Global Market Share – The Atlas of Economic Complexity
Recent Developments:
On July 1st, 2022, Moody’s, an American credit rating agency that publishes financial research and analysis on stocks, bonds, and commodities, confirmed the Ba1 rating with a “stable” outlook. According to Moody’s, the Ba1 rating affirmation reflects Morocco’s economic resilience and the build-up of significant foreign exchange reserves covering over six months of imports at the end of 2021, providing a buffer to absorb the impact of the global commodity price shock.
It is considered that economic growth in Morocco in the period 2021-2024 will be supported by the government’s strategic focus on accelerating economic recovery. It is noteworthy that Morocco is one of the few countries in the world in which the share of renewable energies in the total electricity production capacity has reached 37%, and it was supposed to reach 42% without some obstacles and the Corona pandemic.
Economic Growth:
According to the World Bank’s January 2022 Economic Monitor Morocco report “From Recovery to Accelerated Growth,” the sustainable implementation of an ambitious and multifaceted reform agenda will be essential in order to achieve broad-based growth and job creation in the country.
This report provides an analysis of the growth performance of the Moroccan economy over the past decades and shows that to date, fixed capital accumulation has been the main trigger of that growth, with limited productivity gains and insufficient contribution of labor, despite the favorable demographic situation.
The report presents simulations of the impact of different policy options on economic growth in Morocco. According to these simulations, the sustainable implementation of a broad-based reform agenda that raises levels of human capital, economic participation, and corporate productivity will be critical to achieving the ambitious growth goals set by the new development model. Such an agenda would enhance the unleashing of Morocco’s productive capacities, enable its youth and women to access the labor market, and raise the educational qualifications of workers.
Commenting on this, Jesko Hentschel, World Bank Director for the Maghreb and Malta. said: “In the coming period, the Moroccan economy will need to diversify its sources of growth to continue creating jobs and reducing poverty. As envisaged in the new development model, this may require the implementation of broad reform efforts to stimulate private investment, promote innovation, engage women in the workforce, and increase human capital.”
Not only that but many institutions and labs talked and agreed on the above such as The Atlas of Economic Complexity, Standard & Poor’s, and The Observatory of Economic Complexity. Their message was clear and straight to the point, in order to be more complex, Morocco is obliged to diversify its resources for growth and adopts more complex sectors such as industry, technology, and artificial intelligence.
This raises to our mind an important question; how does the role of the geopolitical situation touch the Moroccan economy?
The truth, the political atmosphere at the global level is of concern for several considerations, the most important one is the concussion of the economic recovery recorded by the world countries including Morocco due to the imbalances that resulted from the Covid-19 pandemic, as a result of the Russian-Ukrainian crisis, and knowing that Russia contributes significantly to securing the energy side and that the two countries are considered an indispensable source in the field of wheat, while Ukraine represents the first source of vegetable oils.
The current situation as it is known nowadays has led to a rise in inflation rates at the global level, there is a crisis for countries that have rearranged their economic papers and forecasts, and the World Bank has rearranged growth rates that are on a downward trend.
When it comes to its level, Morocco has been affected, of course by these repercussions, but we can say that the Moroccan economy is going through a very delicate period in 2022, first, there is the drought factor that is hitting the country, and forecasts indicate that grain production will not exceed 32 million quintals of wheat, the suffering of oil prices that skyrocketed, recording an increase of more than 50% while it was around 89 dollars before the war, along with the state-subsidized gas that has gone in the same direction while it was at 5.1002 dollars per MMBtu, this only slowing Morocco’s pace of growth and complexity.
The High Commission for Planning (HCP) confirmed that the inflation rate reached 7,7% on Friday, August 20th, which is a historical rate, noting that the inflation rates ranged from 0.9% to 1.8% at the furthest estimation, and it is expected that this crisis will continue since predictions confirm that the Russian-Ukrainian war will not end soon since there have been no signs of stopping, and it may last until December 2022.
However, on the side, in the context of the current global crisis, shortages have hit many vital sectors, namely agriculture, and energy. While Morocco was just as affected as the rest of the world, the Kingdom did not have to worry about its supply of fertilizers, necessary to increase and improve its crop yields. Indeed, in addition to breaking turnover records in fertilizer sales, due to their soaring prices on the global market, Morocco went even further and donated or sold at a reduced price a total of 550KT of fertilizer to African countries, reaffirming its leadership and commitment to food security in these trying times.
The direction of the Moroccan economy:
Economic Complexity:
Morocco’s most specialized products by Revealed Comparative Advantage (RCA) index are mainly Calcium Phosphates, Phosphoric Acid, Phosphatic Fertilizers, Legumes, and Mixed Mineral or Chemical Fertilizers.
The highest complexity exports of Morocco according to the product complexity index (PCI) are Lamps; electric filament or discharge lamps, including sealed beam lamp units and ultra-violet or infra-red lamps, arc lamps, light-emitting diode (LED) lamps, Insulating fittings; for electrical machines, appliances, equipment, excluding insulators of heading no. 8546, electrical conduit tubing and joints, therefore, Electrical apparatus; parts suitable for use solely or principally with the apparatus of heading no. 8535, 8536, and 8537, Lighting or visual signaling equipment (excluding articles of heading no. 8539), windscreen wipers, defrosters, and demisters; electrical, of a kind used for cycles or motor vehicles, and Diodes, transistors, similar semiconductor devices; including photovoltaic cells assembled or not in modules or panels, light-emitting diodes (LED), mounted piezo-electric crystals.
source : The Observatory of Economic Complexity