IMF: Morocco facing significant economic risks

IMF: Morocco facing significant economic risks
Despite well-received reforms, Morocco's economy is facing major challenges - such as youth unemployment - that threaten to undermine progress.
2 min read
24 February, 2015
Abdelilah Benkirane's government has successfully implemented several economic reforms [AFP]
Morocco is facing significant risks, especially if the economic crisis in Europe persists and oil prices rise again, according to the IMF's latest annual assessment of the Rabat economy.

Despite this, the kingdom's economy is performing well due to significant economic reforms.

"Commendable progress was made, but the economy still faces significant risks that call for sustained implementation of reforms," said IMF Mission Chief for Morocco Jean-François Dauphin on 23 February.

     The IMF expects economic growth to reach 4.5 percent in 2015, five percent in 2016, and to continue to improve throughout 2017.

The IMF expects economic growth to reach 4.5 percent in 2015, five percent in 2016, and to continue to improve throughout 2017 with a projected growth rate of 5.3 percent.

The IMF official also said Moroccan authorities had considerably reduced economic imbalances over the past three years.

Describing the government efforts led by Abdelilah Benkirane to reform the subsidy system as "impressive", the IMF also outlined its success in reducing the country's overall budget deficit.

The IMF official further noted the current account deficit had narrowed and foreign exchange reserves had increased. New export sectors have also emerged, specifically within the automotive and aviation sectors.

Morocco, however, faces the risk of higher energy import costs should oil prices rise due to "geopolitical tensions in the Middle East and/or the Russia-Ukraine standoff…[or] a surge in global financial market volatility".

The IMF official urged the Moroccan government to continue implementing reforms to consolidate its gains. He also stressed the need to do more to "foster higher and more inclusive growth by lowering unemployment and poverty incidence, notwithstanding progress made in the last decade".

The overall unemployment rate remains high at 9.7 percent at the end of 2014 - with youth unemployment around 20 percent.

This article is an edited translation from our Arabic edition.