Question

1. what do you think was the main problem from economic perspective in Morocco in year 2019. Explain with reasons. 2. And as a consultant to policy maker what policy would you suggest to solve the problems of economic growth in 2019. why and how your suggestion would solve the problem. 3. Also explain the negative outcomes of suggested policy. explain in 600 words.

Answer 1

1. In 2019, the economy of Morocco faced a deceleration in agricultural sector. Agricultural output declined to -2.1% and for that reason a negative impact was upon the real GDP of the economy. As it was a bad crop year, agricultural export also dropped. Overall net exports were negative indicating a low competitiveness in the export sector. Import increased due to high energy demand. Hence, net export was negative. Labour force participation also fell to 46.1%.

2. Investment induced policy should be taken by the government. There was no much disturbance in the money market of Morocco in 2019. Investment in the agricultural sector is required to boost up production. Agricultural sector in Morocco is mainly rainfed. Hence, during the period of inadequate rain, production falls. Therefore, improvement in technology in the form of bringing irrigation facility or such new techniques of crop harvesting can be useful for the farmers to increase production. Crop loan at low interest rate can be provided to solve the problem. Labor force participation rate should be increased to boost economic production and growth. Wage hike or reduction in income tax rate can induce workers to join workforce.

3. There is no such negative impact of giving crop loan to the farmers. However, there is a risk of non recovery of loan in case of crop failure. Negative impact of tax reduction on income is reduction in government revenue. Government expenditures has to be risen. Hence, government may face fiscal deficit due to this policy.