Morocco’s economic growth remains sluggish in 2018 despite unexpected positive growth of cereal production. GDP growth decelerated from 3.5 percent in the first quarter of 2017 to 3.2 in the same period of 2018. On the supply side, the economic slowdown is mainly due to the sharp decline of agricultural value-added growth from 14.8 percent in 2017-Q1 to 2.5 percent in 2018-Q1, which is only partially compensated by the good performance of non-agriculture activities. The latter increased by 3.4 percent (vs. 2 percent only in 2017-Q1), mainly driven by the combined rebound of secondary and tertiary activities. The increase has been particularly marked in extractive industry due to the continued upturn of phosphate production and exports.
With a return to normal rainfall conditions, agriculture GDP is projected to decline in 2019, thus dragging down overall GDP growth to 2.9 percent. Yet, nonagricultural GDP is expected to sustain its performance driven by more dynamic manufacturing and services sectors, which will be the key growth drivers, with the former continuing to benefit from substantial foreign investments into automotive industries.