investment, the main driver of growth

In a new study on country risk, Fitch Solutions expects investment to remain the main driver of economic growth in Morocco in 2022. It contributes 1.4 percentage points, boosted by the sector public and the automobile. After +0.3% in Q1, GDP growth should gradually pick up over the rest of the year, reaching an average of 1.6% in 2022. Strong public consumption and a rebound in tourism will support economic activity, in the face of private consumption weakened by rising inflation.

In a new study on country risk, Fitch Solutions expects Morocco to grow by 1.6% this year. The international specialist in credit risk and macro intelligence explains this slowdown by the contraction of agricultural production and weaker domestic demand than last year. According to his analysis, the Moroccan economy shrunk by only 0.3% in the first quarter, with a 14.3% year-on-year contraction in agricultural production following preferential weather conditions which weighed heavily on exports. fillets. The spending breakdown also revealed a slowdown in domestic demand as high inflation left its mark. Growth in private consumption and investment, at an annual rate, would have reached 1.1 and 0.7% respectively in the first quarter, against 6 and 3.3% in the same period last year.

GDP growth will pick up over the rest of the year (it would have relatively accelerated to 0.9% in the second quarter and 0.8% in the third according to the High Commission for Planning), to reach an average of 1.6% in 2022, as investment and private consumption pick up under accommodative fiscal and monetary policy. Fitch Solutions, which is the leading provider of ratings content Fitch Ratings, expects investment to remain the main driver of economic growth in Morocco this year. It will contribute 1.4 percentage points (pp) to the increase in gross domestic product (GDP). Boosted by the public sector and the automobile, the contribution of investment to GDP will even be higher than the five-year pre-Covid-19 average (1.3 pp). “Over the coming quarters, we estimate that investment will be supported by the public sector, following the government’s approval of investment projects worth 10.9 billion dirhams (or 0.9% of the GDP) in April in an attempt to support economic activity.

Likewise, we are counting on an increase in investments in the Moroccan automotive sector, which continues to position itself as an attractive destination for companies seeking to relocate their production from Ukraine”, it is underlined. According to the study, private consumption remains subdued given soaring prices and low consumer confidence. Inflation would average 5.2% in 2022, reaching a record high, which could put pressure on private consumption. “Overall, we expect private consumption to contribute 1pp to GDP in 2022, marking a sharp slowdown from the pre-Covid-19 five-year average of 1.7pp,” Fitch Solutions said.

On the other hand, public consumption, which would have increased by 5.4% in the first quarter, reflecting the government’s efforts to reduce inflationary pressures, will support economic activity. “As a result, we expect government consumption to add 0.8pp to GDP growth, more than the 5-year average of 0.5pp before Covid-19,” it said. Furthermore, Fitch Solutions estimates that a recovery in tourism activity will reduce the negative contribution of net exports to GDP growth from 2.5 pp in 2021 to 1.5 pp in 2022. Weakening domestic demand is expected to also result in slower import growth. Regarding 2023, despite a difficult global macroeconomic environment, the study expects Moroccan economic growth to accelerate to 3.2%, based on a strong rebound in agricultural production. Similarly, inflation would slow to 2.3%, which will reduce the pressure on private consumption, thus supporting overall growth.

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