Morocco’s economy continues to operate below potential, with the rainfed agricultural sector contributing to volatility and a timid recovery of the other sectors. Real GDP is expected to slow further to 2.7% in 2019, due to a decline in agricultural output (minus 2.1%). Non-agricultural growth will improve (3.4% in 2019 compared to 3% in 2018), driven by better performance of phosphates, chemicals, and textiles output. On the demand side, private consumption will contribute the most to growth, boosted by higher salaries and low inflation. The contribution of net exports will remain negative, reflecting low competitiveness of exports and dependence on energy imports. Thanks to sound monetary policy and ample supply of fresh food, inflation has remained low, under 0.6%. The unemployment rate will slightly decline to 9.3% in H1-2019, underlined by a protracted fall in the labor force participation, which dropped to 46.1%.
Growth is expected to pick up gradually and average 3.3 over 2020–2021, mainly driven by more dynamic secondary and tertiary activities, bolstered by high foreign investments. In particular, significant FDIs continue to flow into automotive industries, especially in the new Peugeot plant – that will eventually double the sector’s production capacity – as well as into logistics and trade services following the expansion of the Tangiers port. Inflation is projected to average around 1% over the medium-term.