HCP: Pandemic Hurt Morocco’s Aeronautics, Automotive Sectors in 2020

Rabat – Morocco’s industrial activities recorded negative impacts in 2020 due to COVID-19 and its repercussions, especially those highly dependent on external demand, such as the automotive and aeronautics sectors.

The High Commission for Planning (HCP) listed the Moroccan sectors worst impacted by the COVID-19 crisis in a recent report on the economic situation in Morocco.

“Morocco, like all countries in the world, would have been impacted in 2020 by the pandemic, suffering painful socio-economic consequences,” HCP said.

The sectors that the pandemic worst affected are those which depend heavily on external demand, including from European countries.

“These are mainly the tourism sector and its ancillary activities, mechanical, metallurgical, and electrical industries (IMME), textile and clothing industries, trade, and transport,” said the HCP report.

Several other sectors continue to show resilience, including agro-food, extractive, chemical, and para-chemical industries, health, education, and administrative services.

The report shows that industrial activities suffered from the “negative repercussions” of the temporary shutdown of many companies during the pandemic.

The sector’s added value contracted sharply, by 7%, in 2020 against an increase of 2.8% in 2019.

HCP explained the underperformance due to the drop in the added value of IMMEs of 22.4% in 2020 against an increase of 4.7% a year earlier.

The shutdown of several industrial units due to the crisis highly impacted the activity of the automotive sector.

Morocco’s aeronautics sector, meanwhile, suffered due to the challenges various aviation operators encountered. These led to the collapse in demand for new aircraft, “which would have forced the major manufacturers in the sector to reduce the rate of their production.”

Morocco considers the aeronautics and automotive industries among the key sectors in its economic pillars.

Other sectors’ performance

Regarding textile and leather activites, HCP said that the sectors decreased by 14.1% in 2020 after an increase of 3.1% in 2018.

HCP acknowledged that Turkish competition led to impacts on the two sectors.

Morocco’s government has repeatedly complained about unfair competition between Moroccan and Turkish textile businesses.

The government identified the “unfair” competitiveness due to its Free Trade Agreement (FTA) with Turkey.

The North African country shared on several occasions concerns regarding its FTA with Turkey, saying that it negatively impacted its economy.

Rabat said that the FTA with Ankara resulted in a $1.2 billion deficit for the Moroccan economy.

The two countries had to amend the FTA in order to maintain its effective implementation.

In addition to Turkey, competition with Chinese companies and the informal sector also weakened the textile and leather industries in Morocco, HCP found.

“These weaknesses would have been aggravated first by the disruption of the supply chains of industrial units with inputs from Asia, particularly from China, and by the fall in external demand, particularly from Spain and France.”

“The difficulties have been alleviated by the emergence of strong global and national demand for medical related textile items,” HCP added.

Morocco’s government implemented several measures to recover the economy, including the production and export of face masks.

The country has experienced strong demand for face masks, especially from European countries who purchased millions of masks from Morocco when wearing masks became mandatory.

With regards to the agri-food industry, HCP said the added value of the sector improved in 2020, registering modest growth of around 0.6% in 2020. The figure is a slight increase from 2019 (1.1%).

“This good outcome made it possible to offset the export losses in this sector, thanks to the good performance of domestic demand, maintained by the efforts made to support purchasing power,” HCP said.