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World

Morocco's economy to grow 4.6pc in 2021 -planning agency

  • The forecast is based on assumptions of an improvement in foreign and domestic demand in addition to an average cereal yield of 7.5 million tonnes.
  • Lower tax revenues and higher subsidies to ease the impact of COVID-19 pushed Morocco's fiscal deficit to 7.4% in 2020.
14 Jan 2021

RABAT: Morocco's economic growth should rebound by 4.6% in 2021 after contracting by 7% last year under the double impact of the COVID-19 pandemic and a drought, the planning agency said on Thursday.

The forecast is based on assumptions of an improvement in foreign and domestic demand in addition to an average cereal yield of 7.5 million tonnes, the agency said in a report.

Recent abundant rainfall augurs well for this year's agricultural yield, refilling dams after two consecutive years of drought that undermined farm output.

Lower tax revenues and higher subsidies to ease the impact of COVID-19 pushed Morocco's fiscal deficit to 7.4% in 2020, more than twice the targeted 3.5% of GDP. It is expected to shrink to 6% of GDP this year as tax and non-tax revenues rise.

Public debt is expected to surge to 95.6% of GDP in 2021 due to external borrowing, however, while the current account deficit is seen increasing to 3.3% of GDP as imports continue to outweigh exports.

Last year, Morocco drew on an International Monetary Fund liquidity line worth $3 billion and tapped the bond market twice, raising 1 billion euros ($1.22 billion) in September and $3 billion in December.

That helped offset a drop in hard currency inflows resulting from a 55% contraction in tourism revenues in 2020 and a drop in foreign direct investment.

Inflation is forecast to pick up to 1.1% in 2021 from 0.1% in 2020, the planning agency said, while the unemployment rate would stand at 11.1% in 2020 from 12.8% in 2020.