Research firm Fitch Solutions, affiliated with one of the world’s leading credit rating agencies, has presented a positive outlook for Morocco’s economic performance.
The firm has confirmed its “forecast of a decline in Morocco’s current account deficit from 2.4% of gross domestic product (GDP) in the first half of 2024 to 1.4% of GDP in the second half of 2024.”
The firm also confirmed that goods imports will exceed exports in the second half, with Morocco’s economic growth accelerating from 2.8% year-on-year in the first half of the year to 3.1% year-on-year in the second half.
According to the report, this acceleration in growth is supported by interest rate cuts, declining inflation, and expansionary fiscal policy.
This is expected to support increased capital inflows as investment accelerates. It will also boost consumer demand, especially with the slight appreciation of the Moroccan dirham in the second half of 2024.
The coming fiscal year is expected to witness a continued decline in Morocco’s current account deficit to 1% of GDP, due to accelerating growth in the eurozone, an improved agricultural season, and lower energy prices; which will increase Morocco’s foreign exchange reserves and import coverage.
While this represents a widening of 0.6% of GDP in 2023, it remains below the average of the ten years preceding the COVID-19 pandemic of 5.1% of GDP.
Fitch experts noted that the decline in the deficit in the second half of 2024 is largely due to an increase in phosphate and derivative exports.
After contracting by 34.1% in 2023, phosphate exports saw a slight recovery in the first half of 2024, growing by 7.5% year-on-year, a trend expected to continue in the second half of 2024, with phosphate exports likely to record double-digit growth, supporting overall goods exports.
Goods imports will exceed exports in the second half of 2024, primarily due to accelerating economic growth, supported by interest rate cuts, declining inflation, and expansionary fiscal policy; leading to increased imports of capital and consumer goods.
However, the report cautioned that headwinds to goods and services exports and remittance flows will continue to shape Morocco’s economic performance towards the end of the second half of this year.
It noted that despite the recovery in phosphate exports and the strong performance of the automotive sector (car exports increased by 9% year-on-year), goods exports grew by only 3% year-on-year in the first half of 2024.
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