Morocco’s official planning agency on Wednesday predicted a 1.8 percent fall in the second quarter of the country’s economy, after witnessing a 1.1 percent growth in the first quarter.
In a bid to curb the spread of the novel coronavirus, the government issued a lockdown that began March 30, which is expected to have adverse impacts on the country’s economy.
According to the agency, the lockdown could cut 2.8 percent off Morocco’s economic growth in April, which is equivalent to 10.9 billion dirhams ($1 billion). This is coming after the country recorded a loss of 4.1 billion in March.
Demand for exports fell by 3.5 percent in the first quarter compared with the same period of 2019 and is expected to fall by 6 percent year-on-year in the second quarter. The automotive sector, representing 27 percent of export sales, has been disrupted by falling demand and the temporary closing of Renault and Peugeot assembly plants.
More so, phosphates and derivatives exports fell by 40 percent in value in the first quarter due to lower prices. But falling energy prices will reduce import costs, partly offsetting the lower value of exports, it said.
There is however a demand for fruit and vegetable exports as a labour shortage caused by coronavirus has hit agricultural production in southern Europe. The country also saw its money supply grow in the first three months by 3.6 percent from 3.7 percent in the previous quarter.
Morocco this week drew all its available resources worth $3 billion under a precautionary liquidity arrangement with the International Monetary Fund (IMF) to limit the social and economic impact of the COVID-19 pandemic.
Prior to this, Focus Economics analysts projected a growth of 3.0 percent in 2020, which is down 0.1 percentage points from last month’s forecast, and 3.4 percent in 2021. Recovery in agricultural output, financial reforms as well as healthy household spending should strengthen domestic demand, they say.
Morocco is likely to experience a recession in 2020 due to sizable declines in exports, tourism, and remittances and a freeze in economic activity, according to the IMF.
