There is a tradition in Morocco whereby its growth prospects are measured by how much it rains in the new year. The country’s economy is largely dependent on its natural resources. So, when snow covers the Atlas Mountains, people spend their long winter nights watching weather forecasts instead of news bulletins.
As the World Bank puts it: “Economic growth largely depends on agricultural yield, despite the fact that industry and tourism represent 40% of GDP, compared to a humble 14% contribution by the agricultural sector.”
The Moroccan economy fared better by the end of 2022 after a difficult start.
The North African country faced a wave of difficult challenges last year including the ongoing Covid-19 crisis, the repercussions of the Russian war on Ukraine, an exceptionally severe drought, an unprecedented rise in inflation as well as a contraction in consumption and expenditure, the government budget deficit, social and popular discontent, and a sharp drop in growth to 1.1% from 7.9% in 2021.
By the end of the year, however, the situation had significantly improved. The Moroccan national football team reached the semifinals of the World Cup in Qatar, there was a noticeable recovery in tourism, travel, and entertainment, and hotel reservations surpassed the number of rooms and beds available.
Some hospitality providers even forgot that there was a time, not long ago, when their hotels had been closed or nearly empty for about two and a half years during the pandemic.
Farmers also forgot about the months-long severe drought when rainfall was scarce, recession prevailed, agricultural production declined, and a freshwater supply crisis worsened in disadvantaged areas.
In Morocco — where economic diversification is key to overcoming crises — it is said that the return of rain gives colour to nature, improves investor sentiment and lifts the morale of politicians.
This approach is reflected in a popular adage: “The rain helps feed people and manage their affairs, thus increasing their satisfaction with the ruler.”
A diverse economy
International financial institutions often describe the Moroccan economy as being among the most diverse in the Middle East and North Africa region. On the other hand, it is also among those most affected by rising energy prices, climate change, and international crises.
This was the case with that difficult start to 2022.
In its last report of the year, Morocco’s Central Bank said that “the value added has declined in most agricultural activities at a rate of 15% due to unfavourable climate conditions.”
However, the bank is expecting agriculture to recover in 2023 and achieve a surplus of 7%, on the condition that it produces 8 million tonnes of wheat — which is the typical amount in normal agricultural seasons.
A persistent drought has cost the Moroccan treasury $3 billion to import wheat, barley, and corn in 10 months, according to a report by Morocco’s Foreign Exchange Office, which oversees trade.
It stated: “The energy bill has increased by 100%, reaching around $13 billion. The cost of wheat imports has also increased by 90%.”
Phosphate exports covered around 80% of the cost of purchasing oil, gas, and wheat, which are paid for in US dollars, thanks to the increased demand for phosphate fertilisers, of which Morocco is the world’s top importer and exporter.
Amid media talk of “fertiliser diplomacy”, after several Western countries boycotted Russian products due to its war with Ukraine, Morocco emerged as an international player in markets as far as the Americas — from Canada to Brazil.
Rabat exported $9 billion in automobile sales by October and generated revenues of 176.6 billion dirhams ($18 billion) from exports of financial, tourism, and digital services and offshore technology.
It also received foreign remittances of 89 billion dirhams ($9 billion) from its diaspora of over 5 million Moroccans abroad. Moreover, foreign direct investment (FDI) grew by 50%, and overall foreign investment flows exceeded 32 billion dirhams ($3 billion) in just 10 months, making Morocco the top country in North Africa in that regard.
Despite their significance, these numbers do not hide the macro-economic difficulties, social challenges, and high unemployment rates among youth and women. Still, they remain tolerable considering the turbulent international situation and record levels of uncertainty worldwide.
During a monthly questioning session in parliament, Prime Minister Aziz Akhannouch said: “Our cornerstone of government action is to avoid any sudden external climate or international influence. This is why the government is working against the clock to produce 52% of our own electricity from renewable sources and investing $15 billion in water pumping projects to supply cities and agricultural needs in order to provide food security and combat climate change."
"We are also investing in our people through education, sports, healthcare, hospital construction, and social care in anticipation of any economic emergency with a social cost or epidemic with a health cost.”