Morocco s economic growth will slow down significantly over ----, as agricultural production collapses on the back of a drought. On the up- side, exports will continue to outperform, and investment will remain elevated, as the country pushes forward with its plan to become a re- gional exporting hub between Europe and Africa. ...With revenues for rural households slashed down by falling outputs, we expect consumption growth � -- of GDP over the past decade � to weaken over the coming quarters. To address the situation, Rabat has set up a EUR---mn aid plan to the rural sector over the coming months to support production and revenues; we nevertheless believe that this amount is too small to successfully compensate the fall in rural household revenues. In addition, with the Moroccan government dedicated to fiscal conservatism over ----, we do not believe that the fall in agricultural revenues will be compensated by a surge in public spending in other sectors. ...Given BAM s traditional cautionary monetary policy, we do not see it embarking on a sudden and large-scale monetary loosening over the coming months, thereby reducing its ability to support growth in our forecast environment. On the upside for private consumption, we believe that Morocco s annual inflation will remain low over ---- � on the back of further weakness in global oil prices � and expect remittances - Business Monitor International Ltd www.bmiresearch.com
...Despite not possessing hydrocarbon wealth, the economy will re- main a relative outperformer in North Africa over the medium term. Investor interest in the country as an export-oriented manufacturing hub for the European market and increasingly to West Africa, as well as relative security compared to the rest of the MENA region, will bode well for Morocco s underlying growth momentum in the next few years. ...Despite not possessing hydrocarbon wealth, the economy will re- main a relative outperformer in North Africa over the medium term. Investor interest in the country as an export-oriented manufacturing hub for the European market and increasingly to West Africa, as well as relative security compared to the rest of the MENA region, will bode well for Morocco s underlying growth momentum in the next few years. The all-important agricultural sector will neverthe- less remain exposed to weather, resulting in significant volatility in headline growth. ...Average annual inflation in Morocco will remain close to -.- over ----, similarly to ----, as rising food prices from a lower-than- expected harvest are compensated by a decrease in household demand. This will allow the central bank to maintain its current benchmark interest rate at -.-- throughout the year.
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