Drought, coronavirus to slow Morocco's economic growth to near 2%: planning agency chief

RABAT (Reuters) - Morocco’s economic growth is expected to be revised downwards to near 2% in 2020 from an initial forecast of 3.5% due to drought slashing agricultural output and fewer tourists due to the coronavirus outbreak, the head of Morocco’s planning agency (HCP) said on Tuesday.

“Growth this year will witness the steepest drop in 20 years,” Ahmed Lahlimi told Reuters by phone.


The volatile agricultural sector, accounting for 13% of GDP and employing 33% of the workforce, is already seeing drought forcing farmers to deplete their savings and sink in debt, he said.

Last year, the agricultural sector shed 85,000 jobs due to lack of rainfall, according to official figures.

Morocco based its 2020 budget and initial growth forecast on an average crop year of 7 million tonnes of cereals.

The lack of spring rainfall could mean the country’s cereals output would plummet to 3 million or 4 million tonnes, according to Abdellatif Izem director of the federation of industrial millers.

“The climate has been so harsh to us this year,” Lahlimi said.


Due to coronavirus, Morocco expects fewer tourists and dwindling remittances from the Moroccans living abroad, both key for the flow of hard currency in the country, Lahlimi said.

Morocco has confirmed three coronavirus cases and one death, an 89-year-old woman. It canceled all trips to Italy and direct flights to Beijing, banned fans from attending football matches and canceled events involving foreign travelers.

“This is a tough year for the Moroccan economy,” he said, as demand from the EU, Morocco’s main trading partner, dwindles as a ramification of the coronavirus outbreak.

To absorb external shocks, Morocco widened last Friday the band in which its currency trades from 2.5% to 5% on either side of a reference price.

“By June only, we expect to have a clear idea of the impact of the dirham flexibility on dealing with external shocks,” he said.

The drop in oil prices and the measures introduced to encourage smaller businesses will help alleviate some of the impact of drought and drop in foreign demand, he said.

Inflation is expected to continue on its downward trend amid a drop in import costs and in domestic consumption index, he added.

Reporting by Ahmed Eljechtimi; Editing by Lisa Shumaker