Morocco H1 Trade Gap

Morocco's trade deficit soared 72 percent in the first half of 2008 as costly fuel and grain imports outweighed higher selling prices for exported phosphates, the Exchange Office said on Wednesday.

The trade gap widened to 43.94 billion dirhams ($5.95 billion) from 25.58 billion a year earlier, the office said on its Web site. Exports grew 15 percent to 123.4 billion dirhams while imports climbed 26 percent to 167.3 billion.

Fuel imports jumped 48 percent to 32.7 billion dirhams. After a poor national harvest last year, wheat imports grew 49 percent by volume to 1.915 million tonnes and the average price jumped to 3,393 dirhams per tonne from 2,062 dirhams.

Key exports of textiles, fruit and vegetables all declined, it said, but tourism and money sent home by Moroccans living abroad helped improve the kingdom's current account balance.

Morocco has enacted a swathe of investor-friendly reforms to reverse perceptions it is a risky place to do business. New business parks, motorways and ports have made it more attractive as an industrial and services platform on Europe's doorstep.

Foreign investment has risen sharply in the past two years and the economy is benefiting from a construction boom and growing household spending.

But some of the industries in the vanguard of the government's export strategy are struggling to compete.

Foreign sales of tailored clothing fell 6.2 percent in the first six months of the year while hosiery exports were down 13 percent. Exports of electronic components slipped 14 percent.

A surge in world prices of phosphates and phosphoric acid made for a better overall export performance.

Phosphoric acid exports were unchanged by volume but prices almost tripled. Sales of phosphates, used mostly as fertiliser, fell 17 percent by volume but more than doubled in value. Foreign direct investment and loans fell 1 percent from the same period last year to 17.543 billion dirhams ($2.37 billion). The government is targeting $4 billion of FDI this year, up from $3 billion in 2006.

Tourism income was little changed at 23.9 billion dirhams after several years of growth, while remittances from Moroccans living abroad grew 5 percent to 25.8 billion dirhams, making them Morocco's biggest source of foreign currency.

The central bank's net foreign assets stood at 195.44 billion dirhams at the end of June, up 4 percent from the end of December.