Morocco’s eco­nomic growth slows in Q1 as agri­cul­tural out­put falls

Daily Trust - - REUTERS -

Morocco’s eco­nomic growth slowed sharply to 2.5 per­cent in the first quar­ter from a year ear­lier, and is likely to ease slightly again this quar­ter as agri­cul­tural out­put shrinks, the coun­try’s plan­ning agency said yes­ter­day.

Agri­cul­ture, which ac­counts for about 15 per­cent of Morocco’s gross do­mes­tic prod­uct, fell 3.4 per­cent in the first three months of 2014 and is ex­pected to drop 3.9 per­cent in the sec­ond quar­ter af­ter a record high har­vest last year, the agency said.

First-quar­ter eco­nomic growth of 2.5 per­cent marked a slow­down from 4.5 per­cent year-on-year in the fi­nal quar­ter of 2013, and the plan­ning agency fore­cast it would ease again to 2.3 per­cent in the sec­ond quar­ter.

Slow­ing growth will make it harder for the cash-strapped North African king­dom to cut spend­ing and re­form sub­si­dies, taxation and its pen­sion sys­tem as de­manded by the In­ter­na­tional Mon­e­tary Fund and the World Bank.

The de­mands are linked to a two-year, $6.2 bil­lion pre­cau­tion­ary credit line agreed by the IMF in 2012 for Morocco, and other loans from the World Bank.

The plan­ning agency has fore­cast that Morocco’s econ­omy will grow 2.5 per­cent this year, down from 4.8 per­cent last year and ex­pects ce­re­als pro­duc­tion of around 7.0 mil­lion tonnes in 2014, down from 9.7 mil­lion tons, in­clud­ing 5.2 mil­lion tons of soft wheat.

The non-agri­cul­tural sec­tor, which in­cludes tourism, grew by 3.5 per­cent in the first quar­ter of 2014 from a year ear­lier, up from 2.2 per­cent in the last quar­ter of 2013.

Morocco ended sub­si­dies of gaso­line and fuel oil ear­lier this year and has started to sig­nif­i­cantly cut diesel sub­si­dies as part of ef­forts to re­pair pub­lic fi­nances.

The budget deficit to 5.4 per­cent of gross do­mes­tic prod­uct in 2013, its low­est level since be­fore the Arab up­ris­ings else­where in the re­gion which prompted gov­ern­ments in the Mid­dle East and North Africa to ramp up spend­ing in a bid to ease so­cial ten­sion. The govern­ment ex­pects the deficit to fall fur­ther to 4.9 per­cent of GDP in 2014.

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