Assessing the Trade and Welfare Impacts of African Continental Free Trade Area (AfCFTA) on Morocco: A Combined Gravity-CGE Analysis

Abstract

On May 30, 2019, the African Continental Free Trade Area (AfCFTA) came into effect, marking a significant milestone for African leaders in establishing the largest trading area since the founding of the World Trade Organization. Despite numerous studies on its impacts across the continent, limited attention has been devoted to Morocco. This study evaluates Morocco's trade potential with AfCFTA member states. It examines the economic effects of the agreement using two complementary methods: a gravity model based on CEPII data to explore trade potential and a CGE framework based on the PEP 1.1 model calibrated with SAM 2019 to assess the overall impacts on the Moroccan economy. Results suggest Morocco's simulated exports and imports with Africa could increase by 72% and 65%, respectively. Yet, overall macroeconomic gains are modest: exports rise by only 0.80% and imports by 0.93%. GDP growth is projected to remain limited at 0.76% (basic prices) and 0.55% (market prices), with minimal income improvement for households (0.65%), firms (0.77%), and the government (0.05%). These results underscore the fragility of South-South trade and the need to reinforce North-South cooperation to enhance Morocco's economic benefits from AfCFTA.