Sluggish performance marked Moroccan economy last year
CASABLANCA - Morocco’s sluggish economic performance in 2018 was marked by several factors that hampered growth, putting pressure on the Islamist-led government to do better in 2019.
A movement calling for the boycott of leading consumer brands — Afriquia petrol stations, Sidi Ali mineral water and Centrale Danone’s milk — to denounce the soaring cost of living took its toll on Moroccan economy.
The feeling of social inequality among Moroccans was backed by figures released by the government. The National Survey of Household Consumption and Expenditure said large disparities between layers of society persist.
The top 10% of the richest spend about 12 times more than 10% of the poorest while the standard of living of 5% of the richest is 20 times that of 5% of the most disadvantaged, the survey stated.
King Mohammed VI’s dismissal of Minister of Economy and Finance Mohamed Boussaid last August came after he received economic reports detailing Morocco’s slow pace of reform.
The king in November criticised Minister of Industry and Trade Moulay Hafid Elalamy during a work session for serving personal interests rather than those of the country. King Mohammed VI lashed out at Elalamy for failing to advance the Industrial Acceleration Plan in the Souss-Massa region nearly a year after it was inaugurated.
Ahmed Lahlimi Alami, high commissioner for planning, called for acceleration and adaptation of structural reforms.
“Economic growth remains rather weak, still subject to rainfall risks with a low technology and export capacity offer, little job creation and little contribution to the reduction of social and territorial inequalities,” said Alami
Morocco’s economic growth slowed in the third quarter of 2018 to 3% of GDP from 3.9% in the same period a year earlier, the High Commission for Planning (HCP) said.
Growth has been driven by domestic demand in the context of a well-controlled rise in inflation and a sharp increase in the financing needs of the national economy, said HCP.
HCP predicted that economic growth would be 3% in 2018 against 4.1% a year earlier. The agricultural sector posted a marked slowdown, from 13.4% growth in the third quarter of 2017 to 4.1% in the same period in 2018. Household consumption, which is the main driver of the country’s economy, is on a downward trend, continuing to exacerbate deficits.
Foreign direct investment (FDI) rose 36.75% from January-November last year, a note released by the Foreign Exchange Office said. Morocco lured $3.35 billion in investments in the first 11 months of 2018, up from $2.4 billion in the same period a year earlier.
The increased FDI flows helped offset Morocco’s worsening trade deficit, which increased 7.7% during the same period. The widening deficit was due to a larger increase of imports ($45.8 billion) over exports ($26.2 billion) although the rate of export growth (up 9.7%) was higher than that of imports (up 8.8%).
Other main factors behind the worsening deficit are declining tourism revenues, which dropped 1.8% to $5.2 billion and remittances from Moroccan expatriates, which declined 1.7% to $6.2 billion.
Unemployment is also bearing the brunt of lower economic growth with just 122,000 jobs created from September 2017 to September 2018. The unemployment rate fell slightly to 10% in the third quarter of 2018 against 10.6% a year earlier.
Moroccan Prime Minister Saad Eddine El Othmani said in November that indicators showed that Morocco was experiencing economic gains. “Those who claim that we are in crisis, that investment is declining… are circulating unfounded rumours,” Othmani told the House of Representatives.
He stressed that the ranking of Morocco by Doing Business in the 60th place was recognition of the “good health” of the Moroccan economy.
Morocco moved up nine places in the Doing Business 2019, the latest World Bank annual ratings indicated.
2019 will be challenging for the Islamist-led government, which is expected to try to accelerate the pace of economic and social reforms called for by King Mohammed VI.