Written by 5:13 pm Economy

Economic growth forecasted to slow down in Q1 2024

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The national economy is anticipated to expand by over 2.4 percent in the first quarter of 2024, a decrease from the 3.5 percent growth observed in the same period of 2023.

The High Commission for Planning attributes this moderation to the extractive and chemical industries’ dynamics, coupled with enhanced non-tradeable services.

Highlighting the economic outlook for Q1 2024 in its report on the fourth quarter of 2023, the Commission indicated a probable slowdown in growth. The return of seasonal drought is anticipated to impact the economy, delaying the agricultural seasons. A substantial precipitation deficit, reaching 53 percent compared to a standard farming season, caused a significant delay in early crop cultivation.

However, there’s a projected increase of 0.5 percent in agricultural value added, assuming a return to normal rain patterns during the agricultural season beginning in Q1 2024.

In the non-agricultural sector, an anticipated growth of 2.8 percent is expected, driven by sectors like chemical, transportation equipment, and automotive industries. Extractive industries’ added value is forecasted to improve by 9.4 percent, a significant rise from the previous year’s decline of 11.8 percent. Services’ growth will remain moderate, contributing 1.6 points to the national economy’s growth compared to the secondary sector’s 0.5 points.

Domestic demand is forecasted to be the primary growth driver, backed by increased public transfers to vulnerable households, mitigating income slowdowns, particularly in drought-affected rural areas. Household consumption is expected to rise by more than 1.2 percent annually in Q1 2024, while public administration consumption and investments are likely to support internal demand. However, non-financial company investments might witness a slight slowdown due to continued high bank financing costs.

The report foresees net external demand continuing to impact growth negatively, marking the third consecutive quarter with a -1.8 point contribution.

Despite increased external demand for certain industries like automotive and phosphate, the growth of exports of goods and services is expected to slow down to 11.1 percent in Q1 2024, compared to 15.5 percent in the previous quarter. Meanwhile, import growth is projected to remain significant due to improved internal demand and the recovery of demand for half-finished products.

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