Despite an overall growth estimated at 4.7 percent, fueled by a record grain harvest, economic growth in Morocco is likely to decline due to a slowdown in exports and services, according to a new report by Standard Chartered Bank.
According to the report, non-farm growth has fallen from 4.5% in the third quarter in 2008 to 1.9% in the fourth quarter and was just 1.3% for the first quarter in 2009.
Morocco is heavily reliant on the European Union as a market for Moroccan goods; some 60% of all exports are destined for the EU, but as the EU is facing hard times due to the global economic crisis, a lower demand for goods is expected.
The decreased demand will hurt the agricultural sector, which is one of the country’s key sectors, according to the report. The Moroccan High Commission of Planning says that foreign demand in the last 12 months has fallen by some 5.5%.
The tourism industry, which contributes almost 8% of Morocco’s Gross Domestic Production (GDP), will most likely also suffer from the economic slowdown as more and more of the country’s potential tourists are finding themselves with less money to spend on traveling.
In order to counter the downward trend, the Moroccan government has outlined a plan that will boost the country’s export and service industries by improving business, attracting direct foreign investment and overhauling national infrastructure.
While the budget deficit is likely to reach 2.9% of GDP in 2009–2010, the bank predicts that the deficit will increase due to the spending required to take the country out of the economic slowdown.
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