New projections from the World Bank regarding Morocco’s economic growth rate for this year show a slight drop from initial expectations, which are expected to be updated for 2025 and 2026 estimates within the Middle East and North Africa region (MENA).
Not far from what was outlined in the “Global Economic Outlook Update,” released during the “Spring Meetings” co-organized by the International Monetary Fund (IMF) and the World Bank, the international financial community is expecting Morocco to reach an annual economic growth rate of 3.1% for the year 2024, before slightly increasing to around 3.3% in 2025.
Data and information included in the “Global Economic Prospects” report for the June 2024 edition showed that Morocco’s economy is expected to reach around 2.4% by the end of the current year (at market prices, based on the average USD prices during the 2010-2019 period).
This figure is calculated “on a calendar year basis.” The growth rate is expected to increase to “3.7% in 2025 and 3.3% in 2026.”
After what Hespress analyzed based on the same report, the “Regional Outlook” summary explains the expected decrease to 2.4% by what World Bank experts described as “the struggles of oil-importing countries due to weak private sector activity.”
This decline is attributed “partially” to the “impact of rising inflation rates” and also to the “contraction of agricultural production in Morocco early in 2024.”
The forecast also indicates that “private sector activity in Morocco is expected to decline in 2024.”
It is clear that the report made by the World Bank about Morocco’s economy “might not have integrated the anticipated positive impact”, that economic Moroccan experts were waiting for after the late rainfall graced the lands of the Kingdom at the end of March and the beginning of April 2024.
The data is attached with a methodological note stating, “The World Bank’s forecasts change at all times because of new information or changes in circumstances (worldwide).”
Therefore, these projections may differ from those contained in other World Bank publications even if the basic economic outlook assessments do not change significantly when compared to timelines.
It was also pointed out that “the data are presented based on the cost of production factors.”
When comparing Morocco with the other countries in the MENA region, it is also expected that the growth rate will increase to 2.9% in 2024 and then to 4% annually in 2025-2026.
The oil economy is recovering
It is expected that the economic sector will recover more in the MENA region to reach 2.8 in 2024 and then rise to 4.2% in 2025. This is going to be mainly due to the evolution of the oil sector towards the end of 2024.
The revision of these forecasts for 2024 tends overall towards a decrease, “compared to what was anticipated last January, reflecting the impact of extended oil production cuts and ongoing conflicts in the Middle East,” according to explanations provided by the World Bank.
The updated economic data source also projected that “the growth rate in the GCC (Gulf Cooperation Council) countries is expected to rise to 2.8% in 2024 and 4.7% in 2025.
In detail: “Non-oil activities are expected to support growth rates in Saudi Arabia in 2024,” and the gradual resumption of oil activities is expected to boost growth in 2025.
Among “the oil-exporting countries outside the GCC, the anticipated recovery in the oil sector in 2025 will help bolster growth in both Algeria and Iraq.”
Economic risks due to war
The escalating geopolitical conflicts in the region were not overlooked in the report and evaluations by experts from the international financial institution (based in Washington), who clearly expressed increasing concerns and fears about the potential spread of these conflicts.
They stated: “The heightened uncertainty regarding the economic outlook in the West Bank and Gaza Strip this year reflects the severity of the ongoing conflict in the region.”
The economic outlook for the West Bank and Gaza Strip remains highly uncertain. Growth projections for 2024 range from “minus 6.5%” to “minus 9.4%,” depending on various factors influencing these forecasts.
The World Bank also stated the dangers of these tensions: “One of the severe negative risks threatening the region is the potential escalation of armed conflicts. For oil-importing countries, the tightening of global financial conditions could lead to capital outflows and currency depreciation.”
The organizations finally cautioned that “countries with high levels of government debt will experience an increase in debt servicing burdens due to higher borrowing costs and elevated risks of financial instability.
Additionally, severe climate events resulting from climate change, along with other types of natural disasters, continue to pose significant risks in the region.”
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