Research Briefing | Sep 15, 2023

Morocco: The economic impact of the Al-Haouz earthquake

The human cost of the earthquake that struck Morocco on September 8 has been terrible, but lower than it could have been. The same is true of the economic cost. We have taken a closer look at the economies of the affected regions, and at government’s emergency response plan, to evaluate the economic impact.

What you will learn:

  • On Friday, September 8, at about 23:10, an earthquake with magnitude 6.8 on the Richter scale struck the area of the High Atlas in Morocco. The epicentre was 18 km deep at a point southwest of Marrakech, in mountains at an altitude of over 3,200 metres above sea level. The human cost has been dreadful: by the interior ministry’s count, as of 19:00 on Wednesday, September 12, the event had caused 2,946 deaths and 5,674 were injured.
  • I While the toll is high, it is not as high as feared mainly because the affected areas are remote and thinly populated. The consequence is that the impact on Morocco’s society is deep but narrow: the population of Al-Haouz, Chichaoua, and Taroudant provinces are being affected terribly, while the rest of the country is affected to an almost negligible degree. Similarly, the GDP in the affected areas is a very small share of national GDP.
  • The biggest economic effect of the earthquake will be the effect of government’s emergency spending in response. The government announced measures on Thursday, September 14, that we estimate will end up representing extra spending of MAD9.1bn, equal to 2.2% of expenditures in the 2023 budget. The resulting effect on gross government debt is slight: it will move the government’s debt-to-GDP ratio from 90.9% to 91.6%. The IMF approved a $5bn Flexible Credit Line to Morocco in April, which means the extra debt will not carry a high cost in interest.
  • Pending a clearer picture of aid and remittances inflows, we are not at this stage changing our overall GDP forecast, which is of real GDP growth of 1.9% in 2023 and 2.6% in 2024.
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