Morocco’s Economic Growth to Slow by 2.4% in First Quarter of 2024

Rabat – Morocco’s economic growth is expected to slow by 2.4% in the first quarter of 2024, according to a report released today by the High Commission for Planning (HCP).

This is in the wake of a world economy that has been hit by a turbulent geopolitical scenario and a prolonged drought.

According to the HCP report, the Moroccan economy will grow by 2.4% on an annual basis in the first quarter of 2024, down from 3.5% in the same period last year. “The recovery that began in late 2023 will be hampered by the return of the autumn drought,” the report stated.

The start of the 2023-24 agricultural season has been characterized by a significant delay in the establishment of early crops. The rainfall deficit for the first four months of the campaign reached 53% compared to the same period in a normal agricultural season.

Should rainfall conditions return to that of a typical season, especially in the first quarter of 2024, the agricultural added value might show an improvement of 0.5% in annual variation, the HCP stressed in its report.

Growth will be 2.9% if agriculture is taken out and will be fueled by ongoing advancements in secondary sector activities, namely in the chemical, transportation equipment, and automotive industries, the report added.

Meanwhile, the added value in the extractive industries will continue to recover, rising by 9.4%, compared with the -11.8% recorded a year earlier.

The development of services will be more gradual, but will still contribute significantly to economic growth -1.6 points compared to 0.5 points for the secondary sector.

Meanwhile, domestic demand will continue to be the main driver of growth. “The deceleration in incomes, strongly felt in rural areas due to unfavorable weather conditions, would impact household spending, but would be somewhat mitigated by the increase in public transfers,” the HCP report explained, noting that household consumption will grow by 1.2% in the first quarter of 2024.

By contrast, investment by nonfinancial corporations was expected to decline “in the context of continued increases in bank financing costs.”

Additionally, HCP’s economic assessment indicated that international trade will negatively impact economic activity in Morocco for the third consecutive quarter, reducing total economic growth by 1.8 percentage points.

“Despite solid foreign demand for automotive products and continued growth in exports of phosphate derivatives, growth in the volume of exports of goods and services is expected to slow to 11.4% in the first quarter of 2024, compared with 15.5% in the previous quarter, due to the slowdown in services,” the report projected.

At the same time, it went on to conclude, “import growth will remain sustained, boosted by improved domestic demand and the recovery of purchases of semi-finished products.”