Economy survives shock but recovery will be slow

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The HCP estimates that at the end of the second quarter of the current year, the national economy would have contracted by 13.8% in the second quarter of 2020, after an increase of 0.1% the previous quarter, under the effect a 14.4% drop in non-agricultural value added and a 6.1% decline in that of agriculture.

In the third quarter of 2020, we say from the same source, the drop in value added excluding agriculture would gradually diminish, with the recovery of trade, transport and manufacturing industries, standing at -4.1 %. And given a 5.9% drop in agricultural value added, economic activity would drop by 4.6%.

Gloom in the second quarter of 2020

Judging by HCP estimates, the underperformance of the national economy noted in the second quarter of 2020 is also attributable to that of the tertiary sector which, would have decreased by 11.5% instead of + 1.6%, a quarter before, following the contraction of commercial activities, transport, accommodation and catering.

In contrast, only communication and non-market services would have remained dynamic, with the reinforcement of operating expenses.

The same downward trend is observed in the secondary sector, the rate of change of which has dropped to -14.3%, after + 0.2% in the first quarter.

In detail, the decline in activity would have been more pronounced in the building and public works, electricity and in industry, particularly textiles, IMME (Mechanical Metallurgical and Electromechanical Industries) and building materials. On the other hand, the food and chemical industries would have kept their trend growth rate. Ditto for the mining activity which, despite everything, would have shown a great resistance to the effects of the COVID-19 crisis, and this, thanks to the improvement of the extraction of nonmetallic ores.

As such, production of crude phosphate, which had almost stagnated in the first quarter of 2020, would have been more sustained in April 2020, driven by demand from the local chemical industries which was more vigorous, in line with the expansion of the quantities exported from fertilizer.

A lessening of the decline in activity in perspective

Under the effect of the combined effect of a certain number of factors, including a gradual deconfinement, a reopening of borders and a resumption of transport activities and trade, growth and world trade should recover slightly in the third 2020 quarter.

Starting from there, the HCP reports an improvement of 3% compared to the second quarter of 2020 in foreign demand addressed to Morocco. And the international prices of energy and food products in a context of continuation of the situation of excess supply compared to world demand will have to condition the inflationary pressures which, according to the HCP, should remain contained.

In terms of domestic demand, the HCP estimates that it will recover moderately and slowly. As such, the fall in household consumption would ease and public consumption would continue its upward trend at the rate of 6%, year on year, driven by the dynamics of particularly social spending. And this, at a time when investment remains globally sluggish and its recovery would take time to materialize in the third quarter of 2020.

As a result, the decline in demand should continue to penalize activities outside agriculture, thus causing a drop in their added value.

Thus, in the secondary sector, the decline in activity would reach -5.8%. In terms of mining activity, the drop in world agricultural consumption should curb the dynamics of international demand for fertilizers and the production of non-metallic ores would adjust to less vigorous external demand, causing in its wake a slowdown in growth in mining value added.

The activity of the tertiary sector would be driven by the dynamics of the communication and non-market services sectors, and to a lesser extent by the resumption of trade and transport activities, while it would remain sluggish in event services and in accommodation.

N. BATTERY

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