Morocco's economy to grow 6.6% in 2009 Q1

[MoroccanChica]

Rabat, 20 Jan. 2009 (MAP) - Morocco's economy is expected to achieve a 6.6% growth in the first quarter of 2009 up from 4.8% in the past quarter thanks to prospects for an agricultural campaign above the average of the past five years.

The 2008/2009 agricultural campaign is off to a good start and augurs of bringing the production gap beyond expected levels, said the Rabat-based High Commissioner of Planning (HCP) in its situation note of January 2009.

By end December 2008, rainfalls exceeded that of an ordinary year by 106%. This surplus has benefited to all agricultural regions and increased the water stored in dams destined for agriculture to 40.7%.

In these conditions and taking into consideration a cereal campaign nearing 70 million quintals, the agricultural value added could increase by 22.2% in the first quarter of 2009, thus contributing 2.9% to the national economic growth, underlines the document.

According to HCP, the national economic activity would develop in a context marked by uncertainty about the extent of the repercussions of the international financial crisis and the ongoing fall of the prices of raw materials. It would decline in 2009 Q1 by 0.4% after a 0.9% decline in 2008 Q1.

Due to a decrease of activity among Morocco’s main commercial partners, foreign demand of goods destined towards Morocco would moderately slow down in 2009 compared to the 9% in 2008. This trend could continue in quarter 1 of 2009 with a growth rate not exceeding 2% due to a lackluster economic growth outlook and the slowdown of international trade.

After a good performance in the 1st half of 2008, exports of goods slowed in the 3rd quarter before plummeting in the 4th quarter (-16.3%), following the fall in foreign sales of phosphates and their derivatives, after a sharp rise in the 1st and 2nd quarters.

Out of phosphates and derivatives, foodstuffs and capital goods have supported exports, while consumer goods suffered from a decline in foreign demand.

Imports, HCP said, boosted by energy products, semi-finished products and capital goods, increased in the third quarter by 10.1%. However, they dropped sharply in the 4th quarter, benefiting from the decline in commodity prices on the international market.

The industry, with 2.7% growth in the 3rd quarter of 2008, is below its medium-term trend. This development is due, in particular, to the weak industries of textiles, clothing and electronics, as evidenced by the decline in sales outside the clothing industry, hosiery and electronic components, respectively by 7.1%, 16.8% and 23.5% over the same period.

The tourism sector also seems to suffer from the effects of an unfavorable international context. The favorable evolution of overnight stays spent by local tourists could not compensate for the decline of those of foreigners. Thus, during the first eleven months of 2008, global overnight stays fell 2.3 % compared to the same period of last year and the occupancy rate fell by 4 points.

Signs of decline also appear at sectors related to domestic demand. Thus, the pace of growth in the building activities was set at about 8.8% in the 4th quarter of 2008, after having been revived by 10.7% in the second quarter. The sales of cement slowed, reaching 3.8% compared to 13.5% in the 2nd quarter.

In the same vein, the value added of the energy sector seems to slip into an unfavorable economic situation that should continue in early 2009. It was mainly initiated by the shift of electric power, whose development slowed down (-0.1 pc) in the 3rd quarter, after it had recorded a 8.5% increase a quarter earlier. This slump has spread to the refining activities, which have seen their production adjusted to a less buoyant local demand, says the HCP.

Underlying inflation rose sharply from 2.8% in January 2008 to 5.5% six months later. These tensions appear, however, to subside in late 2008 and early 2009, taking advantage of the slowdown of the prices of imported raw materials, including non-fresh foodstuffs.

The labor market, for its part, continued its positive trend, which started in 2006, throughout the first three quarters of 2008. The net creation of employment has reached 145,000 jobs, compared to 112,000 in 2007, particularly in the sectors of goods and services and construction. In the 3rd quarter of 2008, unemployment rate was 9.9%, the same level as in 2007.

The combination of economic and financial shocks, which have affected developed economies, has broken the momentum of the growth of foreign incomes. At the end of November 2008, transfers of Moroccans living abroad registered a decline of 1.2% compared to the same period in 2007.

Household spending on consumption has strengthened through a more intense bank financing. Consumer credit therefore grew 32% in the first eleven months of 2008. Meanwhile, imports of finished consumer goods rose by 9.6%.

In early 2009, households could benefit from the combined effect of the improvement of agricultural incomes and reduction of paid taxes. They would still face a drop in labor supply, on a slowdown in non-agricultural activities.

The evolution of investment remained buoyant in 2008 despite a slight retreat compared to 2007. Thus, investment in public works continued to enjoy a revival of public policy. Meanwhile, industrial investments continued throughout the first three quarters of 2008, reflecting a desire to modernize the industrial equipment and an effort to catch up in the face of a climate that is unfavorable to the strengthening of the activity.

However, the receipt of foreign direct investment (FDI), which had greatly boosted the construction projects in 2007, saw its growth rate decline by 23.1% in 2008 at the end of September compared to the previous year. This downtrend further dropped, primarily in the 3rd quarter, as evidenced by the 15.6% decline in foreign investments destined to the real estate sector. Investments in the stock market continued their downward correction after a period of strong growth in 2006 and 2007. The MASI index ended the year 2008 with a decline of 13.5%. The volume of trade exchanges was affected by effects of the correction and fell by 33.6%.

http://www.map.ma/eng/sections/box5/...conomy_to/view