Al Haouz earthquake is expected to have moderate losses on the Moroccan economy, according to a recent research paper by think tank Policy Center for the New South. In September 2023, a powerful earthquake struck several Moroccan provinces, tragically claiming the lives of nearly 3,000 people. A new research paper from the Policy Center for the New South (PCNS) assesses the economic impact of this catastrophe, suggesting moderate losses of around 0.24% of Morocco's entire economy. The research investigates the financial weight of the earthquake and its recovery efforts. According to the April 30 survey, the earthquake will result in a 1.3% drop in Marrakech-Safi GRP and a 10.2% drop in economic activity in the Al-Haouz province, the areas most affected by the disaster. «From these estimations, we can infer that the earthquake on September 8, 2023, was more of a human tragedy with moderate economic losses, especially at the macroeconomic level», wrote the researchers. They explained that this conclusion «is supported by the analysis of some high-frequency financial indicators, showing the resilient nature of the Moroccan economy following the natural disaster». Relief plan analyzed The research also examines the government's program, the «Program for Reconstruction and Rehabilitation of Affected Areas». This program allocates 120 billion MAD for short-term emergency aid to households, financial assistance for housing reconstruction, and medium to long-term infrastructure rebuilding and upgrading in the affected areas, as well as promoting economic activity in other High Atlas provinces. Researchers assessed the two phases of the program. The first part focuses on immediate relief efforts, providing money to families for food and shelter and fixing roads and other infrastructure. The second part focuses on long-term improvements, including building better roads and schools, and creating jobs in farming and tourism. «We assessed the economic impact of the recovery program through its two main pillars, while considering different hypotheses for the financing scheme of the second pillar, ranging from a new injection of money into the economy (debt) to a complete reallocation of investments from non-affected to affected areas», explained the source. In their assessment, researchers suggest that based on «Morocco's commitment to maintaining macroeconomic stability, especially debt sustainability, and aligned with the Ministry of Finance's assessment that treasury debt is projected to decelerate starting from 2023, and to return to 2021 levels by 2025, the scenario that appears most probable for financing the second pillar (98 billion MAD) suggests a primary reliance on investment reallocation, rather than an increase in indebtedness». Considering this scenario, the researchers believe the 120 billion MAD recovery plan will only have «a mild positive impact on growth at the national level», with an average increase of 0.03 percentage points over the period 2024-2028. «For the High Atlas provinces, significant growth increases are expected due to the recovery plan, regardless of the financing scenario», signaled the researchers. Finally, the researchers discuss a difficult choice the government faces : should they focus on helping the most affected areas catch up, even if it means taking money from wealthier areas? «Considering the policy intention to reduce regional disparities, and the necessity of assisting underdeveloped regions in catching up with the rest of the country's development stage, we might consider the need to prioritize equity over efficiency in such circumstances», the researchers concluded. For the record, the Policy Center for the New South (PCNS) is a Moroccan think tank aiming to contribute to the improvement of economic and social public policies that challenge Morocco and the rest of Africa as integral parts of the global South.
