Boston, MA -- (SBWIRE) -- 08/16/2012 -- BMI View: We have revised down our forecast for Moroccan wheat production as the lack of rainfall during plantings has destroyed part of the crop. This will force the country to import significant amounts of grains in the coming months and will very likely keep food price inflation high and GDP growth lower. We expect continuous investment from multinationals in the dairy sector to boost production methods and growth over the medium term owing to the recent move towards privatisation in the sector. The livestock sector is expected to benefit from moderating global feed prices, while the sugar sector will be hampered by disputes between farmers and the country's monopoly sugar producer.
- Corn production growth to 2015/16: 5.1% to 212,600 tonnes. We see limited growth for the sector as most investment goes into wheat. Moreover, production is discouraged owing to cheap import agreements with the US.
- Poultry consumption growth to 2015/16: 24.7% to 619,600 tonnes. In addition to being driven by economic growth, increased consumption will be led by Morocco's expanding population and the proliferation of a wider range of processed meats, with poultry consumption benefiting the most at the lower end of the market.
- Sugar production growth to 2015/16: 14.5% to 499,600 tonnes. We expect a stronger focus on improved farming methods and greater access to inputs such as fertilisers to do much to improve cane yields.
- Morocco real GDP growth 2012: 3.4%, down from 4.9% in 2011. Over the longer term, we forecast GDP growth to average 4.7% between 2011 and 2016.
- Morocco consumer price inflation 2012: 1.5% average, up from 0.9% in 2011. We forecast inflation to average 2.0% between 2011 and 2016.
- BMI universe agribusiness market value: 2.7% year-on-year (y-o-y) decline to US$5.1bn in 2011/12, forecast to grow on average 3.7% on average annually between 2010/11 and 2015/16.
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The announcement by the Moroccan government that the country's cereal harvest is unlikely to reach even half of last year's output raises a host of downside risks to our generally positive economic outlook. Lower agricultural yields will force the country to substantially increase wheat imports, pushing up food prices while dragging on domestic consumption and balance of payments dynamics. Moreover, higher prices would put further pressure on the fiscal position should policymakers respond by ramping up subsidy payments. As a result, we have made upward revisions to our 2012 forecasts for inflation and the current account deficit, and a downward revision to our projections for household consumption and real GDP growth, which we now see coming in at 3.4%, compared with our previous forecast of 4.3%.
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