The European Bank for Reconstruction and Development (EBRD) has revised down its forecast for Morocco’s economic growth in 2024, and is now projecting a rise of 2.9%, a slight decrease from its previous estimate of 3% in May.
In a report released Thursday, the EBRD indicated that it expects Morocco’s economy to rebound to 3.6% growth by 2025.
The EBRD attributes the downward revision primarily to adverse weather conditions, which are expected to continue exerting pressure on the country’s rain-dependent agriculture sector. However, the industrial and tourism sectors will somewhat cushion the downturn in agriculture.
On the inflation front, the situation appears to be stabilizing. Rates eased to 1.3% in July 2024, driven by lower prices for food and energy.
The Moroccan government’s fiscal consolidation measures of expenditure reductions and tax increases are yielding positive results, according to the report, as evidenced by a narrowing deficit of 4.3% of GDP. Public debt is approximately 70% of GDP as of 2023, despite rising costs associated with external debt servicing.
Nevertheless, Morocco’s economy remains highly susceptible to volatile energy prices, given that the country imports 90% of its energy requirements.
The energy dependency exposes Morocco to potential external shocks. In addition, the agriculture sector which contributes around 12% to Morocco’s GDP remains highly exposed to the impacts of climate change and adverse weather.