Morocco’s most vulnerable economic sectors hit hard by the Covid-19 crisis

In an assessment done by two UN agencies and the World Bank, it has been revealed that Morocco’s most vulnerable economic sectors are being hit hard by the Covid-19 crisis.

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Many countries around the world are trying to flatten the spread rate of the novel coronavirus, implementing travel bans, imposing lockdowns and closing important facilities and venues. While these countries are trying to navigate the sanitary crisis, an economic one is definitely showing its first signs in several nations, including Morocco.

To calculate the damage of the virus on Morocco’s economy the United Nations Development Program (UNDP), the United Nations Economic Commission for Africa (UNECA) and the World Bank drafted a temporary analysis to assess the potential for international organizations to support national responses.

The assessment reveals that, since the start of the Covid-19 crisis, some sectors in Morocco have showed early signs of vulnerability, including tourism, transportation and logistics. The impacted sectors indicate that «Morocco’s economy is being hit hard by the impact of Covid-19 related economic recession, both globally and in Europe, the country’s main trading partner», the document read.

The report’s forecasts show that Morocco’s economy is indeed going to suffer from the negative impact of the pandemic. «A baseline scenario shows that real GDP would recede by 1.5 percent in 2020, the first recession hitting Morocco since more than two decades ago», it reported.

Almost 10 million Moroccans can become poor or at risk of falling into poverty

The three agencies expect Morocco’s overall fiscal deficit to reach more than 6% of GDP in 2020. The fall, according to the same assessment, is primarily «explained by Covid-19-related higher social and economic spending and lower tax revenues, particularly from corporate taxes».

Moreover, they also believe that the central government debt could «peak at 73 percent of GDP in 2020», while the current account balance is to widen to around 7 percent of GDP this year.

The pandemic and the lockdown that followed it will also lead to a slowdown in exports, tourism revenues and remittances.

«Although low oil prices in 2020 will reduce energy import outlays, it will not fully offset the negative impacts of the pandemic on exports of goods and services», the assessment indicates adding that «financing the balance of payment deficit would prove difficult, as FDIs are expected to slow down and risk premium in the international financial markets are increasing».

The drawbacks will also affect the population and its status. The document indicates that the percentage of the population «vulnerable to falling into poverty varies depending on the household expenditure adopted as a threshold».

«Using an expenditure threshold of US$ 5.5 PPP, the numbers of poor and those not poor but vulnerable to falling into poverty are strikingly high: around 25 percent in 2019 and bound to increase to 27 percent in 2020. Therefore, due to the economic crisis almost 10 million Moroccans can become poor or at risk of falling into poverty».

According to the same source, the consequences will hit Morocco’s most vulnerable workers first. It refers to informal sector workers, an important part of Moroccans workers, in impacted sectors like tourism, transportation, trade and the gig economy.

The document referred to efforts made by the government to mitigate the shocks that will follow the pandemic, such as the Covid-19 fund, social security measures and those taken by the central bank. The document is expected to have a second issue in the future to propose possible solutions.

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