Falling imports and rising EU demand for Morocco’s value-added exports cut the country’s trade gap by 20% y/y to MAD104bn ($10.7bn) in the first eight months of the year, helping the country consolidate further its external position, preliminary data from the Office de Change showed.

Total imports (CIF) fell 6.7% y/y to MAD247bn at end-August whereas exports (FOB) increased 6.6% y/y to MAD142.5bn.

Morocco’s trade balance will continue to strengthen in H2 amid falling crude oil prices and the strong harvest this year, thus lower energy and food imports bill. Coupled with rising exports, the pattern will help Morocco narrow further its CA deficit and shore up FX reserves. The CA gap will narrow to 3.4% of GDP in 2015 from 5.8% of GDP the year before, the IMF forecasts.

Energy imports plunged 30% y/y to MAD46.1bn in January-August amid declining crude oil prices. Crude oil imports dropped 47% y/y to MAD10.8bn while those of gas oils and fuel oils shrank 30% y/y to MAD16.4bn.

Food purchases contracted 15% y/y to MAD25.1bn in the first eight months of the year on falling wheat and milk imports amid a favourable harvest season. Wheat imports dropped 28% y/y to MAD6.7bn over the period.

Imports of end-consuming goods shrank 1.2% y/y to MAD46.3bn, reflecting still strong private consumption.

Phosphates exports climbed 18.4% y/y to MAD30.1bn in January-August. Auto exports rose 15% y/y to MAD30.5bn while those of food and agriculture increased 12% to MAD28.5bn.

As to Morocco’s tourism proceeds they remained in the red, falling 2.5% y/y to MAD39.8bn in January-August but the annual contraction narrowed in Q3 during the peak summer season.

Net transfers from Moroccans working and residing abroad rose 5.5% y/y to MAD42.1bn in January-August, helping mitigate falling tourism proceeds. The EU-based diaspora remains the key source of remittances.

Net FDI inflows climbed 21.1% y/y to MAD19.2bn over the period.