Rising Energy Costs Push Morocco’s Trade Deficit to New Heights

After showing timid signs of recovery in 2021, Morocco’s external trade deficit is reaching its highest level in more than five years.

Rabat – After showing timid signs of recovery in 2021, Morocco’s external trade deficit is reaching its highest level in more than five years.

At the end of July 2022, the country’s trade deficit climbed to a staggering MAD 63.9 ($6 billion), according to recent data from Morocco’s Exchange Office, the country’s foreign trade watchdog.

A trade deficit reveals the difference between the amount of goods a country imports and exports. Countries typically aim to export more than they import, yet few do. Countries resort to their foreign currency reserves to cover the difference, which negatively impacts state reserves.

Accordingly, the country now imports 53.5% more than its exports over the course of the first seven months of 2022, up from 48.7% reported a month earlier, Exchange Office data suggests.

Rising energy prices continue to weigh down on Morocco’s trade deficit, as the county imports close to 90% of its energy needs. The country’s energy bill has “more than doubled” at the end of July 2022, the Exchange Office report indicates.

Over the first seven months of 2022, while the volume of energy imports rose by a moderate 9.4%, the cost of energy imports totaled a sweeping MAD 88.1 billion ($8.2 billion), up from MAD 38.7 billion ($3.6 billion).

In addition to the dramatic rise in the cost of energy imports, the country’s ammonia import costs- – a key ingredient in the manufacturing of fertilizers – has reached new heights, as the cost of ammonia rose by almost fourfold since last year.

Ammonia imports went from MAD 3.4 billion ($320 million) in July 2021 to more than MAD 12 billion ($1.1 billion) a year later.

Coupled with rising energy prices, the rise in grain imports on the backdrop of a sub-optimal agriculture season has equally taken its toll on the country’s foreign trade balance, as the bill of wheat imports almost doubled at the end of July.

Wheat exports stood at MAD 17.1 billion ($1.6 billion) at the end of July 2022, up from MAD 8.6 billion ($810 million) a year earlier.