Impacting factors on Morocco’s economic growth in 2023

The likelihood of a bad agricultural season, skyrocketing commodity prices, the persistence of inflation, and its effects on purchasing power all have an impact on Morocco’s economic growth in 2023.

According to CDG Capital Insight’s forecast in a note created as part of the monitoring of macroeconomic prospects and rates, the year 2023 should see a slight recovery around 3% following a sharp slowdown in economic growth in 2022 to 1%.

Based on the assumption of a good agricultural season with cereal production at the level of the ten-year average, or 75 million quintals, this growth should cover a recovery in agricultural growth, from -15% to +7%.

In connection with the anticipated decline in foreign demand, the tightening of financing conditions, and the rise in production costs, these forecasts also account for a slowdown in the non-agricultural component from 3.4% to 2.4%. Given the State’s strong desire to encourage investments through a historically high investment promotion budget of 300 billion dirhams, the year 2023 should also see a small rebound in household demand of 2.4%, a revival of investments of 4.9%, and a decline in foreign demand directed at our economy.

The risk of a poor agricultural season in 2022–2023, the rise in raw material and energy prices as a result of geopolitical tensions, and the persistence of inflation and its detrimental effects on household purchasing power are the three factors that CDG Capital Insight analysts say weigh on economic growth in 2023.

Regarding the trade balance outlook, predictions point to a decline in the trade deficit of approximately 30 billion dirhams to settle at 260 billion dirhams and a decrease in the current account deficit of approximately 1% of GDP (GDP).

This dynamic should be brought about by the slight decline in imports, the decline in exports with the combined decline in demand and prices, the anticipated slowdown in MRE transfers, tourist receipts, and direct investment abroad (FDI) in connection with the deterioration of the economic conditions in the partners.

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