In normal circumstances, Morocco’s economic growth was forecasted to reach 1.9% in the first quarter of 2020.
Rabat – Morocco’s economic growth has experienced a recession of 1.1% in the first quarter of 2020 due to the coronavirus pandemic, and the High Commission for Planning (HCP) expects a 1.8% decline in the second quarter of 2020.
Before the global COVID-19 crisis, the HCP had forecasted a 1.9% increase in economic growth for the first quarter of 2020 and a 2.1% incline for the second quarter.
“The spread of COVID-19 to several countries would have worsened the growth prospects of the world economy for 2020,” said the HCP in its quarterly economic note.
“The slowdown, or even stoppage, of production, the disruption of supply chains and the slowdown in both domestic and external demand would lead to a decline of nearly 2 points in world growth in 2020, to stand at 0.8%,” the report continued.
The HCP estimates the growth of Morocco’s foreign demand declined by 3.5% in the first quarter of 2020 rather than 1.3%, which the HCP had predicted under normal circumstances.
Morocco’s foreign demand is suffering from the downturn in world trade and the decline in the activity of its main trading partners, according to HCP.
HCP’s figures show that the value of exports has fallen by 22.8%, instead of an increase of 1.1%. The automobile sector, which represents 27% of the country’s total exports, is the most affected by the decline.
HCP explained that the car manufacturing segment has been impacted by the drop in local production as a result of the shutdown of Renault and PSA sites, as well as the drop in demand from Europe.
“Roughly 97% of national cars exported to the world are destined for the European market, particularly the French, Spanish, German and Italian markets, which have been badly affected by the health crisis,” the HCP said.
Meanwhile, Morocco’s export of textile products has fallen by 4.3%, in annual variation.
Exports of phosphates and derivatives, accounting for 17% of the total exported in value terms, have declined by 40.1% in the first quarter of 2020 due to the decline in foreign demand and a fall in prices.
The HCP pointed out that some products of the agricultural and fisheries sectors have benefited from higher foreign demand, particularly vegetables and fresh fruit, and citrus fruits.
The higher demand for the products is mainly due to the slowdown in Spanish, French, and Italian production as a result of the lack of farm labor.
Imports have fallen by 4.8% in the first quarter of 2020, in annual variation, instead of the initial 0.9% forecast.
The drop stems from Morocco reducing its electricity dependency on Europe, resulting in a decrease in the country’s energy bill, which represents between 13% and 18% of the imported total in value terms.
The trade balance deficit has widened by 23.8% in the first quarter of 2020 thanks to a significant drop in exports compared to imports.