Covid-19: Economic Growth Declines to 1.1% in First Quarter (HCP)

Casablanca – Under the effect of the Covid-19 health crisis, the growth of the national economy would have slowed down to +1.1% and would settle at -1.8% respectively, in the first and second quarters of 2020, instead of +1.9% and +2.1% in the absence of the Covid-19 effect, according to the High Commission for Planning (HCP).

The spread of Covid-19 to several countries would have worsened the growth prospects of the world economy for 2020, explains the HCP in its quarterly economic note, adding that the slowdown, or even stoppage, of production, the disruption of supply chains and the slowdown in both domestic and external demand would lead to a decline of nearly 2 points in world growth in 2020, to stand at 0.8%.

The HCP estimates that the growth of foreign demand addressed to Morocco would have declined by 3.5% in the first quarter of 2020, in annual variation, instead of 1.3% expected in the absence of the effect of the health crisis, suffering from the downturn in world trade and the decline in the activity of our main trading partners.

Under these conditions, the value of exports would have fallen by 22.8%, instead of an increase of 1.1%, it adds, noting that the automobile, the leading export sector (27% of total exports), would have declined the most.

The car manufacturing segment, already slowing down in 2019 due to the sluggishness affecting the global and European automotive industry, would have been impacted by the drop in local production as a result of the shutdown of Renault and PSA sites and the drop in demand from Europe, according to the HCP, which points out that nearly 97% of national cars exported to the world are destined for the European market, particularly the French, Spanish, German and Italian markets, which have been badly affected by the health crisis.

In the clothing sector, which accounts for 11% of total exports, clothing and hosiery exports would have been constrained by a fall in orders from European customers. In the first quarter of 2020, exports in value terms of textile products would have fallen by 4.3%, in annual variation.

As for exports of phosphates and derivatives (17% of the total exported in value terms), they would have suffered from the decline in foreign demand and the fall in their world prices.

In the first quarter of 2020, exports of phosphate and its derivatives would have fallen by 40.1% in value, according to HCP estimates.

On the other hand, the HCP points out that some products of the agricultural and fisheries sectors would rather have benefited from higher foreign demand, in particular for vegetables and fresh fruit as well as citrus fruits, due to the slowdown in Spanish, French and Italian production as a result of the lack of labour on farms.

For their part, imports would have fallen by 4.8%, in the first quarter of 2020, in annual variation, instead of the 0.9% initially forecast, due in particular to the decrease in the energy bill, which represents between 13% and 18% of the imported total in value terms.

Overall, the trade balance deficit would have widened significantly (+23.8%) in the first quarter of 2020, under the effect of the more significant drop in exports compared to imports. This situation would have resulted in a decrease in the coverage rate by 11.6 points to 49.7%.

In the absence of the health crisis, the growth of the national economy was expected to reach 1.9% in the first quarter of 2020, in annual variation, instead of 2.1% in the last quarter of 2019.

Source: Agency Morocaine De Presse

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