(MEBG) –A report released in late June by the World Bank painted a depressing picture of the Moroccan economy, and even suggested that if consistent and solid growth was not soon resumed, social and civil strife could result.
According to the World Bank report, between 1991 and 1998 the average annual growth rate was 1.9 percent—less than half that of other countries in the region, like Egypt, Jordan, Lebanon, Turkey and Tunisia. During the same period, the Moroccan population grew at an annual rate of 1.8 percent.
In recent years, Morocco has also experienced a steep rise in unemployment and poverty. In 1998, the textile, clothing and the building sectors lost 50,000 jobs. Unemployment approached the 22 percent mark in the urban areas in 1999, a situation that possibly will be exacerbated this summer, because a second consecutive year of low rainfall is expected to spur a new wave of rural migration.
The portion of the Moroccan population that is considered as poor rose from 13 percent to 19 percent between 1991 and 1998. This situation could be a harbinger of social crisis, said the Word Bank, and what is needed to begin rectifying the matter are annual growth rates between 6 percent and 8 percent—a prospect which appears somewhat far-fetched at present.
The World Bank report said that the public sector foots a much too significant share of the wage bill—11.6 percent of the GDP—and employment is too rigid in the private sector, which does not encourage the companies to recruit.
A devaluation of the Moroccan currency seems inevitable, stated the World Bank, even if in the short run it will encourage inflation, as well as increase foreign debt and the price of the imports. But during the past 10 years the dirham had appreciated significantly, which caused significant job losses in the exporting sectors.
Over the long terms it essential to control the rate of inflation, which, if it gets out of hand, could neutralize all or part of the positive effects of the devaluation on the competitiveness of the Moroccan products abroad.
The World Bank report even suggests that the receipts generated by privatization and the liberalization of the telecoms could be used to contain the budget deficit, to reinforce the public investments and to protect the most underprivileged layers from the impact of inflation. Under these conditions, the impact of the devaluation would be worth at least two percentage points of additional growth per annum during the next three to four years.