Any challenges and risks facing the Moroccan economy in 2019?

Maryam Al-Taidi-Rabat

Samira, who works as an administrative assistant in a law firm after pursuing her law studies, believes nothing will change Morocco's economic situation during the New Year.

Samira said in her interview with Al Jazeera Net that the indicators have not changed, and that if they do not get worse, they certainly do not improve.

In the 1930s, Samira adds that the purchasing power of citizens is declining, and that through living and hearing from their surroundings, "living" becomes increasingly difficult, and the citizen is divided between housing and higher food prices, noting that private education alone drains the purchasing power For the middle class.

Any prospects?
According to the 2019 budget, which is based on an economic growth rate of 3.2%, the current year is expected to see a decline in the value added of the agricultural sector, and domestic demand will continue to support economic growth, supported by the recovery of internal final consumption and investment.

Household consumption is expected to contribute to economic growth by 2.2%, investment by 1.1%, while net external demand is expected to decline and a negative contribution to foreign exchange in real growth is estimated to be minus 0.6%.

The new budget, initiated in early January, is based on the priority of strengthening social policies, sustaining major projects, sectoral strategies, supporting private investment, continuing reforms and maintaining macro-economic balances.

Prime Minister Saad al-Din al-Othmani confirmed that 2019 would be the year for the implementation of major reforms and the introduction of a set of laws.

"We hope that with the start of the new year, we will double our work, increase its quality and increase its speed," he said at the weekly cabinet meeting on Thursday.

A white economic year
On the economic performance scenarios of Morocco, the economist Mehdi Lahlou in his interview with Al Jazeera Net that the adoption of economic growth hypothesis of 3.2% (in 2018 estimated by 3.4% and in 2017 estimated at 4.7%) is an indicator of a white economic year, as he put it.

Lahlou explained that the growth rate has been limited by limited resources and shrinking due to lower expected donations from the Gulf States and higher social expenditures.

The Government is not able to implement tax reform and to integrate the informal sector and believes that rising debt relative to national income is "challenging and problematic".

According to the prospects of the performance of the Moroccan economy, which has been announced by the High Commissioner for Planning in a forward-looking budget, the overall rate of public debt will move from 82% of GDP in 2017 to 82.9% in 2019. The general treasury debt ratio 65.7% of the gross domestic product for 2018 and 65.9% of the current year's output.

According to the text of the budget of 2019, regular revenues are 253 billion dirhams ($ 26.6 billion) and ordinary expenses are 243.8 billion dirhams, of which about 29 billion are debt benefits, the balance being 9 billion dirhams, excluding the proceeds of loans and general expenses.

The budget also adds budget expenditure of 73 billion dirhams to the projected deficit of about 63.5 billion dirhams, which the government estimated at 3.3 percent of GDP.

A dilapidated developmental paradigm
The highest authority in the country has shown a will to change the development model because it is unable to create development and reduce social inequalities.

Despite the positive trend of growth in recent years (a rate of 4% over the last ten years), there is a decline in its ability to create jobs.

According to the economic and financial report accompanying the draft budget, the Moroccan economy faces challenges including the need to consolidate the values ​​of transparency, control of rapid urbanization, the completion of the transfer of energy (towards clean energies), the successful entry of the digital stage and the alleviation of obstacles facing the financing of the economy. Morocco relies on imports of fossil fuels by about 93%.

External risks
The internal challenges of the Moroccan economy are unemployment, especially among young people - accompanied by illegal migration and crime, as well as a widening of poverty and vulnerability to middle-class groups as a result of the real decline in income.

He does not rule out the international situation and the external dangers threatening Morocco, such as terrorism and clandestine immigration, and risks associated with opening up to major markets. Morocco's economy is not immune to competition, deepening the continuing deficit of the trade balance, according to the spokesman.

There are still multiple uncertainties surrounding global expectations since the spring of 2018, according to international reports, warning of a number of risks arising from rising protectionist practices and high trade tensions leading to higher tariffs, which could negatively impact supply, raise importers' costs and disrupt chains. Supply, in addition to high energy prices and the price of the dollar.

According to the High Commission for Planning, the prospects for the Moroccan economy during the year 2019 are based on the assumptions concerning the new developments of the international environment, especially the development of prices of raw materials and global demand directed towards Morocco.