In Morocco, nearly one in two modest households declares not to have received any income during confinement. This is one of the lessons of the latest report from the international institution on the region’s economic outlook.
All parameters are in the “red”. This is the observation made by the World Bank (WB) in a report, published on October 19, presenting the economic outlook for the Maghreb and the Middle East.
In the document, entitled “Trading together: towards a revival of the integration of the Maghreb and Middle East region in the post-Covid era”, the international institution paints a very dark picture of the economic situation after seven months of the pandemic in this region, which roughly corresponds to the Arab world, if we exclude Iran and Djibouti.
The growth of gross domestic product (GDP) will fall by 5.2% in 2020, or 7.8 points less than expected in October 2019. Several other indicators are clear: current accounts will show a deficit of -4, 8% of GDP, budget deficits will plunge to -10.1% of GDP, and public debt will jump from 45% of GDP in 2019 to 58% in 2022.
Only Egypt avoids recession
In North Africa, only Egypt can do well and avoid a recession with + 5.6% growth in 2019, + 3.5% in 2020 and + 2.3% in 2021 . All the other countries are struggling: Algeria (+ 0.8%, -6.7%, + 4.1%), Morocco (+ 2.5%, -6.3%, +3 , 4%) and Tunisia (+1%, -9.2%, + 5.9%). Libya is only mentioned for the record as its chaos makes it difficult to assess its economy (+ 1%, -40.9%, -3.6%). Unsurprisingly, the WB concludes that “this suggests a chaotic and difficult recovery”, which will primarily affect the poorest.
IN TERMS OF BUSINESS ACCESS TO CREDIT, THE REGION IS “LAGGING BEHIND THE REST OF THE WORLD”
The most disadvantaged indeed suffer from great fragility, if only because they enjoy less mobility. In Tunisia, 59% of workers who were deprived of jobs during the lockdown did not receive a salary, 30% kept it, and 10% received only part of it. In Morocco, 44% of the poorest households said they received no income during the lockdown, a proportion that reaches 10% among the richest households.
Even if they are known, the Bank recalls the causes of these difficulties: “poor performance in terms of logistics, the inefficiency of customs services, high level of infrastructure costs, unsuitability of legal frameworks for investment, heterogeneity of regulations that apply. ‘add to the high cost of doing business and now represent non-tariff barriers to trade’.
Rethinking economic policies
For businesses’ access to credit, the region is “lagging behind the rest of the world,” underlines the institution. It takes an average of $ 442 and 53 hours to complete export forms, which is three times the amount and four times longer than in developed OECD countries.
TO SUCCEED IN THIS TRANSFORMATION, ALL COUNTRIES MUST TRADE WITH THEIR NEIGHBORS
In this context, “the Covid-19 pandemic offers the countries of the region an excellent opportunity to rethink their economic and social policies and to strengthen trade integration, while reducing their dependence on oil”, pleads the head of the report, Blanca Moreno-Dodson, director of the Center for Mediterranean Integration.
To succeed in this transformation, all countries must play the regional card and trade with their neighbours, whether in terms of food security, health systems, renewable energies or the knowledge economy, insists the World Bank.
Advocacy for regional integration
“A poor-quality internet connection” with “non-existent electronic payment solutions” must transform into a “common digital market” which will improve the productivity and resilience of economies. Not to mention that the prospect of finally accessing a larger regional market will attract investors who are now discouraged by customs and regulatory barriers serving short-sighted local interests.
THE MAGHREB EXCHANGES MORE WITH EUROPE THAN WITH ITS NEIGHBORS
As a reminder, the Arab Maghreb Union (AMU) has one of the lowest integration rates in the world: trade between its members is only 2.4% of their total international trade. The Maghreb exchanges more with Europe than with its neighbours.
The African Continental Free Trade Area (Zleca) should provide “welfare gains” of 5.3% in Morocco, 5% in Egypt or even 4.8% in Tunisia… when the restrictions trade will be lifted, and the temporary movement (via visas) of people will be facilitated between the 55 Member States, says the WB. Hence the urgency, according to the institution, to put an end to the withdrawal into oneself.
