Morocco: HCP Forecasts 5.8% Decline in 2020

12 July 2020 Printable Version

Casablanca - The Moroccan economy is expected to shrink by 5.8% this year under the combined effect of drought and the pandemic of the novel coronavirus (covid-19), according to the High Commission for Planning (HCP).

"The Gross Domestic Product (GDP) should post a decrease in volume of 5.8% in 2020 instead of the 2.5% growth recorded in 2019," said the HCP, which released the 2021 exploratory economic budget.

The primary sector is expected to generate a 5.7% decline in value added in 2020 after having fallen by 4.6% in 2019, while non-agricultural activities should see a net drop of 5.3% in 2020 after an increase of 3.7% the previous year, according to the same source.

As regards the secondary sector, it should record a decline of nearly 6.9% in 2020 after an increase of 3.6% in 2019. With the exception of the activities of the chemical and para-chemical industries and the mining sector, the other secondary activities should show a remarkable drop in their value added.

This Exploratory Budget also highlighted that tertiary sector activities are expected to decline by 4.5% after an increase of 3.8% in 2019. The tourism and transport sectors, heavily impacted by the closure of borders and the measures taken to contain the pandemic, would be the most affected.

In addition, the HCP stressed that under the assumption of a continued downward trend in the activity rate at the national level, the unemployment rate should reach nearly 14.8%, i.e. an increase of 5.6 points compared to the level recorded in 2019.

Under these conditions, domestic demand is expected to post a 4% decline in 2020, its contribution to growth would thus be negative by 4.4 points instead of a positive contribution of 1.9 points in 2019. For its part, the contribution of foreign demand to growth would be negative by 1.4 points, after having made a positive contribution of 0.6 points last year.

At the level of public finances, the covid-19 pandemic and the freezing of national economic activity during the confinement period are expected to have a negative impact on the State budget in terms of tax revenues. The measures taken by the government to stem the spread of the virus are expected to generate additional expenditure to ordinary expenses.

As a result, the budget deficit is expected to widen in 2020 to almost 7.4% of GDP, well above the annual average level reached between 2011 and 2013, i.e. 6.1% of GDP.