Trade openness is not the best bargain in 2019, since world trade in goods already experienced three quarters of contraction and Morocco is no exception. GDP growth came in at +2.5% in Q2 and net exports made a -0.9pp contribution, since export growth came to a sudden stop. This growth performance was also the weakest since Q4 2016. At the same time, agricultural output was impacted by lower crops (-2.8% y/y in Q2). In contrast, non-agricultural output grew by +3.3% y/y, mainly driven by water and electricity output (+20.9% y/y in Q2). Without the exceptional performance in that sector, the latest GDP growth rate would rather have been about +2% y/y; and this is also our growth forecast for H2 2019, since short-term indicators such as car sales are still oriented to the downside (about -10% y/y in August). Low economic growth combined with the increase in days sales outstanding just before the growth slowdown (+3 days to 84 days in 2018) suggests that corporate insolvencies are likely to rise (we forecast +7% in 2019).
