HCP: Growth expected at 1.4% in Q4 2022, 3.4% in Q4 2023

The High Commission for Planning (HCP) forecast for the fourth quarter of the year that economic growth should accelerate to 3.4% annualized in the first quarter of 2023, instead of 0.3% growth in the same period of the previous year. Forecast for the first quarter of 2022 and 2023.

This will be mainly driven by a 6.7% recovery in agricultural value added and a 3% improvement in non-agricultural activities over the same period, the HCP notes.

National economic growth will need to show resilience if winter climate conditions in 2023 adjust to a normal season, the HCP notes, with the recovery of purchasing power of households, particularly in rural areas, likely to be particularly persistent, allowing their consumer spending to increase. 4.5% year-on-year in the first quarter of 2023, instead of +1.1% in the same period of 2022.

On the other hand, the continued tightening of monetary policy should contribute to a slowdown in business demand, but investment growth should be preserved thanks to the strengthening of government spending support. The same source notes that overall, domestic demand should contribute to overall economic growth and reach +3.2 points in the first quarter of 2023 instead of +0.8 points in the same period of the previous year.

Growth by activity areas should be supported by the recovery of agricultural activity and continued strengthening of services, subject to a return to normal winter precipitation conditions in the first quarter of 2023.

1.4% growth in the fourth quarter of 2022

After growing 1.6% in the third quarter, the national economy would show an annualized growth of 1.4% in the fourth quarter of 2022, the HCP forecast in the same note.

Agricultural value added would continue to decline by -15.9%, but the continued dynamics of market services would support a 3.4% improvement in non-agricultural activity over the same period, the HCP said.

The same source noted that growth in secondary sectors, excluding manufacturing, would decline, but activity in tertiary branches would pick up and show a 5.7% year-on-year increase, adding that activity in services, mainly merchants, express transport and tourism appeared to continue. and contributes +1.5 points to overall economic growth.

In turn, value added in the non-market tertiary sector would accelerate after experiencing a slight slowdown in the third quarter of 2022. Manufacturing activity would have increased by 1.9% after +2.8% in the previous quarter. .

This slowdown could be attributed to weaker domestic demand, especially for industries related to construction, rubber and plastics production. The supply of chemical products, which experienced a sharp increase in export prices, would continue its decline that began in mid-2022.

Manufacturers would suffer from higher production costs compared to the same period in 2021, especially in the context of relatively easing supply challenges for the transport equipment manufacturing sector. The record also shows that the pharmaceutical industry, transport equipment manufacturing and, to a lesser extent, the textile industry would have bucked the trend, benefiting from more dynamic foreign demand.

In annual changes, their added values ​​would increase by 10.1%, 17.4% and 5.3% in the fourth quarter of 2022, respectively. On the other hand, the construction sector would show a 3.1% decline in the fourth quarter of 2022. On the one hand, the production of new apartments would moderate against the background of weak dynamics of real estate activity. decrease in household demand.

On the other hand, the increase in production costs would lead operators to limit the import of construction materials and the use of local products. Thus, cement sales would continue their decline that started in February 2022 at a rate of -11.2% year-on-year in the fourth quarter of 2022.

This outperformance would be confirmed by a decline in loans to real estate developers amid continued concerns about margins. Mining activities would also decline by 11.6%, instead of -10.6% in the previous quarter. A sharp increase in the export prices of non-metallic minerals would be accompanied by a decrease in their production.

In particular, the production of crude phosphate decreased by 24.6% against the background of more than double the increase of the international price. Crude phosphate exports are said to have declined at a faster rate, but the decline in demand from processing industries has moderated amid expectations of a recovery in foreign demand for phosphate fertilizers following the decline. In the first half of 2022, the rate of use in agricultural production globally.

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