Drought, Coronavirus Drag Down Moroccan Growth Forecasts

Farmers carry containers of strawberries, to be exported, after picking them in a field in the town of Moulay Bousselham in Kenitra province. (Reuters)
Farmers carry containers of strawberries, to be exported, after picking them in a field in the town of Moulay Bousselham in Kenitra province. (Reuters)
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Drought, Coronavirus Drag Down Moroccan Growth Forecasts

Farmers carry containers of strawberries, to be exported, after picking them in a field in the town of Moulay Bousselham in Kenitra province. (Reuters)
Farmers carry containers of strawberries, to be exported, after picking them in a field in the town of Moulay Bousselham in Kenitra province. (Reuters)

A Moroccan business center has expected the country's economic growth to drop to 0.8 percent this year due to drought and the impact of the new coronavirus on non-agricultural sectors.

The Centre Marocain de Conjuncture (CMC) noted that agricultural production will decline by 3 percent in 2020 compared to 2019. Last year’s season had also witnessed a sharp drop in production due to drought.

As for non-agricultural sectors, the CMC expected a slowdown in growth as a result of COVID-19.

Tourism is one of the most affected sectors amid estimates of a drop by 25 percent and a slow and difficult revival.

The transportation sector will also take a significant hit. The minerals and extraction industries will be impacted by the drop in global demand. Growth in the mineral sector is expected to drop 2.5 percent, said the center.

Growth in the manufacturing sector is predicted to drop to less than 2 percent, said the CMC, noting that several industrial establishments are suffering from a shortage in raw material and others are facing difficulties in accessing the markets. Several factories have already stopped production, especially in the car making sector.



Russian Central Bank Head Warns of Turbulent Times ahead Despite Slowing Inflation

Russia's Central Bank Governor Elvira Nabiullina attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov/File Photo
Russia's Central Bank Governor Elvira Nabiullina attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov/File Photo
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Russian Central Bank Head Warns of Turbulent Times ahead Despite Slowing Inflation

Russia's Central Bank Governor Elvira Nabiullina attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov/File Photo
Russia's Central Bank Governor Elvira Nabiullina attends a session of the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia, June 20, 2025. REUTERS/Anton Vaganov/File Photo

The Russian economy has adapted to Western sanctions and inflation is now slowing, but turbulent times and major technological shifts lie ahead, central bank governor Elvira Nabiullina said on Wednesday.

Despite the sanctions, the Russian economy grew by 4.3% last year but is set to slow sharply in 2025, with many officials and economists saying that the current model has exhausted its growth potential.

"We have adapted to some external challenges (but) no, we are facing very turbulent times ahead," said Nabiullina, who is widely credited with steering the Russian economy through the Ukraine military conflict and resulting sanctions.

"But I am confident that this also presents new opportunities for development and for increasing labor productivity in conditions of expensive labor. We base our efforts on this," she told a banking conference.

She stressed that the high cost of labor - spurred by the military spending that has led to a wage growth spiral in many sectors, as well as by curbs on immigration - would remain for a long time, Reuters reported.

Nabiullina said the economy should in future rely entirely on domestic sources of financing as cheap funding from abroad, abundant before the Ukraine conflict, is no longer available.

"In my view, structural adaptation to external constraints has been completed. We have demonstrated our ability to adapt to these challenges, but now we are facing structural shifts of an entirely new kind, primarily technological ones," she said.

"They may have even more far-reaching consequences than what we experienced over the past two years," Nabiullina said, mentioning artificial intelligence applications in the economy as one such challenge.

INFLATION SLOWING

The central bank, which has faced heavy criticism over its tight monetary policy, began cutting its key interest rate last month as prices started to come down, helped by the rouble's strength.

Nabiullina said inflation is now slowing faster than the central bank expected, and there are signs of easing in the severity of labor market shortages.

She said that if economic indicators pointed to a more significant slowdown than anticipated, the central bank would have room for bolder interest rate cuts. She dismissed statements by critics of the bank, who want deeper cuts, that the cooling of the economy was excessive.

Nabiullina also rejected statements from many businessman and bankers that the rouble is now overvalued and should weaken to please exporting companies, which saw their revenues shrink as the rouble rallied by over 40% against the dollar this year.

"A weak exchange rate is often a sign of vulnerability, a result of chronically high inflation and a lack of confidence in one’s own currency. It is hardly something to strive for," she said.