Morocco‘s economy is anticipated to grow at a sluggish pace in the first quarter and moderately in the second quarter of this year, influenced by a decline in the value added of the agricultural sector, which suffered from weak rainfall at the beginning of the season.
The country is expected to achieve its weakest grain harvest in 17 years.
Forecasts suggest that the Gross Domestic Product (GDP) in the kingdom will grow by 2.9% in the first quarter, compared to 3.5% recorded in the same period last year.
In the second quarter, economic growth is expected to reach 2.7%, up from 2.3% registered in the second quarter of 2023, according to a report released today, Monday, by the High Commission for Planning, the government agency responsible for statistics.
Morocco is experiencing its sixth consecutive drought season, significantly impacting the performance of the agricultural sector, which plays a crucial role in growth, contributing about 14% to the GDP, with 40% of the population living in rural areas and 75% of them deriving their income from agriculture.
The growth in the first and second quarters will be supported by positive dynamics in the industrial and service sectors and a recovery in domestic demand, while agricultural activities will witness a decline of 3.9% and 4.1% respectively, due to unfavorable weather conditions leading to a decrease in grain cultivation area by 42.5% compared to the five-year average, according to official estimates from the High Commission.
The kingdom concluded the fourth quarter of 2023 with the highest growth rate in seven quarters at 4.1%, thanks to a recovery in domestic demand amidst easing inflationary pressures and their impact on household purchasing power.
It is estimated that the overall growth rate for the year will reach 3.1%, compared to the government’s forecast of 3.4%. Expectations for this year are set at 3.7%.
Domestic demand will be a pillar of growth in the first quarter of this year, contributing positively by about 6.7%, considering increased consumption spending before and during Ramadan and improved purchasing power with the easing of inflationary pressures.
During Ramadan, the average household spending in Morocco increases by 18.2% compared to other months of the year. The budget allocated for nutrition witnesses a leap of 17.8%, according to recent data from the High Commission for Planning.
The inflation rate slowed down in February to 0.3% on an annual basis, the lowest level since March 2021, as food prices returned to decline after months of continuous increase, pushing the annual inflation rate for the past two years to 6.6% and 6.1% respectively, the highest levels since the 1990s.
Domestic demand will also benefit from improved investments in the construction sector, as stated in the High Commission’s report, indicating that this dynamic will benefit from government programs related to preparing some stadiums scheduled to host the 2025 Africa Cup of Nations, and a program to rebuild earthquake-affected areas worth 120 billion dirhams over five years, in addition to a program supporting families to own housing worth nearly one billion dirhams this year.
On the other hand, foreign trade will continue to negatively contribute to economic growth by 3.9% in the first quarter, as stated in the report, with the volume of imports of goods and services expected to increase by 17.3% in the first quarter, anticipating larger imports of food products amidst low agricultural production, while exports will rise by 8.4%, primarily driven by automobile and aviation exports in addition to phosphate and its derivatives sales with the return of external demand recovery.
