MOROCCO – Morocco’s economic growth is expected to be revised downwards to near 2% in 2020 from an initial forecast of 3.5% due to drought and the corona virus pandemic, Ahmed Lahlimi the head of Morocco’s planning agency (HCP) has said.
Lahlimi in an interview with Reuters said that as a result of the drought which has ravaged many farmlands and the corona virus which has badly affected tourism, “Growth this year will witness the steepest drop in 20 years”.
Lahlimi noted that Morocco’s volatile agricultural sector which accounts for 13% of GDP and employing 33% of the workforce, is already seeing drought forcing farmers to deplete their savings and sink in debt.
He further noted that last year, the agricultural sector shed 85,000 jobs due to lack of rainfall.
Morocco based its 2020 budget and initial growth forecast on an average crop year of 7 million tonnes of cereals.
According to Abdellatif Izem, Director of the federation of industrial millers, lack of spring rainfall could mean the country’s cereals output would plummet to 3 million or 4 million tonnes.
“The climate has been so harsh to us this year,” Lahlimi lamented.
The raging corona virus has also not spared Morocco’s economy. Due to coronavirus, Lahlimi said that the country expects fewer tourists and dwindling remittances from the Moroccans living abroad, both key for the flow of hard currency in the country.
Morocco has thus far confirmed three coronavirus cases and one death, an 89-year-old woman. It has also canceled all trips to Italy and direct flights to Beijing, banned fans from attending football matches and canceled events involving foreign travelers.
To absorb external shocks, Morocco widened last Friday the band in which its currency trades from 2.5% to 5% on either side of a reference price.
The head of Morocco’s planning agency noted that the agency would only be able to expect to have a clear idea of the impact of the dirham flexibility on dealing with external shock by June this year.
He however noted that the drop in oil prices and the measures introduced to encourage smaller businesses will help alleviate some of the impact of drought and drop in foreign demand.
Morocco’s inflation according to Lahlimi is also expected to continue on its downward trend amid a drop in import costs and in domestic consumption index.