The “war of the worlds” between the U.S. and China has suddenly hit a new threshold, with the implementation of new tariffs by the U.S. administration. Yet, the new trade regime has already impacted Moroccan growth. Lower export growth should cut about -1pp from GDP growth, compared to previous expectations. Obviously, this was not the only reason to explain the relatively weak growth figure of +2.3% y/y experienced in Q1. This performance was quite meager since Q1 2018 was already a weak quarter (with unusually low consumption growth). This year, one of the main disappointments came from agricultural production (-4.8%) as a result of poor rains. Against this background, corporates will probably not avoid a new deterioration of payment behavior, after DSO increased to 84 days in 2018 (+2 days vs. 2017). Insolvencies are expected to increase by +3% in 2019. Monetary easing can be an option since inflation disappeared in Q1 (-0.2% y/y on average). We expect GDP growth to slow to +2% in 2019 after +2.9% in 2018.
