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Rabat – Domestic demand in Morocco is showing signs of recovery in the third quarter of 2023, contrary to previous estimates predicting that recovery should take place in the previous quarter.
A recent report from the High Commission of Planning (HCP) shows that the upturn in domestic demand is mainly driven by rising government spending, likely caused by the substantial funds allocated to earthquake relief following the September 8 earthquake.
Domestic demand is a measure of expenditures from households, investors, and the government. It is considered a strong indicator of economic growth.
According to HCP data, public expenditures rose in 2023, showing an increase of 3.6%, slightly up from 3.1% in the previous quarter.
Household expenditures, however, continue to suffer from high inflation and “weak income.” National household expenditure rose by a quarterly rate of 0.7%.
Inflation in Morocco remains staunchly high, prompting the HCP. Over the first seven months of 2023, inflation rose by an annual rate of 5.4%, still above the recommended 2%. High inflation is a strong factor that reduces the purchasing power of households.
The HCP report contends that the timid rise in household expenditures is due to increased savings, in a context of ongoing bank credit tightening – loans becoming more expensive, deterring consumers.
The increase in household expenditures mainly extends to domestic goods, while those dedicated to agri-food and agricultural products decreased.
Meanwhile, the report shows that investments continue to slide, recording a 2.7% drop in the third quarter of 2023, following a 3.1% fall in the previous quarter.
Read Also: Morocco Expects Growth of 3.7% in 2024
