Morocco: Gains in Agriculture and Textiles As Officials Talk of 6% Gdp Growth; Export Growth Accelerating but Trade Gap Still Widening, Current Account Surplus Up in 2005

Summary

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There have been further signs that the official optimism over growth this year will be justified. The earlier official GDP growth forecast of 5.4% has been supported by the central bank, which sees growth of over 5%, while the government and the IMF are now talking of something over 6%. The driving force will be a rebound in agriculture, which contracted by over 16% last year as a result of drought and resulted in GDP growth of only 1.6% (although planning commission figures show just 0.9%). Supporting the recovery in agriculture is a better showing by the important textiles and clothing industry, which now appears to be weathering the problems caused by loss of competitiveness and rising competition in selling into the EU. Trade data for the first three months of 2006 show exports of finished clothing rising 5.8% from a year earlier, after a 5.8% fall in the whole of 2005. Overall export growth is also improving but, with imports rising faster as domestic demand picks up and coming from a high base, the three-month trade deficit widened by 17.3% on the year, albeit this was down from the 22% widening seen in 2005 despite the impact of the continued rise in world oil prices. The current account has held up better than we had expected, posting a surplus of MAD11.1bn last year, up 30% from 2004, but with the trade gap set to widen further in 2006 the current account surplus is likely to fall again notwithstanding stronger gains in workers' remittances and travel receipts.

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Morocco: Gains in Agriculture and Textiles As Officials Talk of 6% Gdp Growth; Export Growth Accelerating but Trade Gap Still Widening, Current Account Surplus Up in 2005

Strong recovery under way - government talks of 6% growth...

After the weakness last year, when drought caused GDP growth to slow to just 1.6%, there has been mounting evidence that there will be a strong rebound this year. We noted in our 4 April briefing that the government's initial 2006 growth forecast of 5.4% was based on the cere...

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