Rabat - Morocco's economic growth slowed sharply to 2.5 percent in the first quarter from a year earlier, and is likely to ease slightly again this quarter as agricultural output shrinks, the country's planning agency said on Tuesday.
Rabat – Morocco’s economic growth slowed sharply to 2.5 percent in the first quarter from a year earlier, and is likely to ease slightly again this quarter as agricultural output shrinks, the country’s planning agency said on Tuesday.
Agriculture, which accounts for about 15 percent of Morocco’s gross domestic product, fell 3.4 percent in the first three months of 2014 and is expected to drop 3.9 percent in the second quarter after a record high harvest last year, the agency said.
First-quarter economic growth of 2.5 percent marked a slowdown from 4.5 percent year-on-year in the final quarter of 2013, and the planning agency forecast it would ease again to 2.3 percent in the second quarter.
Slowing growth will make it harder for the cash-strapped North African kingdom to cut spending and reform subsidies, taxation and its pension system as demanded by the International Monetary Fund and the World Bank.
The demands are linked to a two-year, $6.2 billion precautionary credit line agreed by the IMF in 2012 for Morocco, and other loans from the World Bank.
The planning agency has forecast that Morocco’s economy will grow 2.5 percent this year, down from 4.8 percent last year and expects cereals production of around 7.0 million tonnes in 2014, down from 9.7 million tons, including 5.2 million tons of soft wheat.
The non-agricultural sector, which includes tourism, grew by 3.5 percent in the first quarter of 2014 from a year earlier, up from 2.2 percent in the last quarter of 2013.
Morocco ended subsidies of gasoline and fuel oil earlier this year and has started to significantly cut diesel subsidies as part of efforts to repair public finances.
The budget deficit to 5.4 percent of gross domestic product in 2013, its lowest level since before the Arab uprisings elsewhere in the region which prompted governments in the Middle East and North Africa to ramp up spending in a bid to ease social tension. The government expects the deficit to fall further to 4.9 percent of GDP in 2014.