Domestic demand boosts economic growth forecasts in Morocco’s Q3

The High Commission for Planning (HCP) expects Morocco’s economy to grow at a rate of 3.2% in the third quarter of 2024, linked to an increase in domestic demand, particularly driven by household spending, which has grown by 3.1%.

 Several factors have contributed to the partial recovery of purchasing power among Moroccan households. These include increased public transfers, such as social welfare benefits and salary hikes in the education sector, which have boosted disposable income.

 There has also been a slight improvement in the job market and foreign transfers from Moroccans living abroad, while inflation has significantly dropped compared to last year (0.7% vs 6.8%). 

This has bolstered purchasing power despite additional expenses associated with major holidays like Eid al-Fitr and Eid al-Adha. Even though households may have dipped into savings to meet these holiday expenses, the overall decline in inflation has provided some relief.

The HCP report also indicated a strong performance in the manufacturing (secondary) and service (tertiary) sectors. 

Growth in these sectors has reached levels similar to those observed before the COVID-19 pandemic (around 3.7%), suggesting a robust recovery in these areas of the economy.

However, Morocco’s agricultural sector, a crucial component of the economy, is facing significant challenges due to severe drought conditions. 

The HCP reports a 4.9% decrease in agricultural value compared to last year. This decline is primarily attributed to the drought’s negative impact on major crops, particularly cereals, legumes, and fodder crops. 

Wheat and barley production is expected to plummet by 44.4% and 51% during the 2023/2024 agricultural season.

 Due to the lack of rainfall, fruit and vegetable production will be significantly affected, especially in eastern regions and areas like Haouz and Tadla.

 While the Sais, Gharb, and North regions are expected to have a more stable supply, overall domestic demand for agricultural products is likely to be met through increased imports.

 Imports of barley and cooking oil are estimated to more than double, with sugar purchases also rising slightly year-on-year. This reliance on imports to meet domestic needs could put upward pressure on food prices.

The HCP estimates that the drought has led to a loss of around 200,000 jobs.