The Moroccan export-driven growth model lost momentum in 2018. Real GDP growth slowed down to +2.9% from +4% in 2017, with two major weakening demand components. First, in Q4 the export performance continued to lose ground (+4.5% y/y in volume terms), landing from a stellar +12.7% y/y in Q4 2017. Second, investment growth deteriorated to -1% y/y in Q4 2018, taking the full-year performance to +3.5%, compared to +6.6% in 2017. The faded global trade momentum has affected Morocco in two ways: (i) the car industry (the country’s major export sector) is facing lower global demand; and (ii) Morocco’s main trade partners are experiencing a marked slowdown (e.g. Eurozone growth is forecast to decrease to +1.2% in 2019). Against this backdrop, Moroccan growth should fall further to +2.5% in 2019. Uncertainties related to global trade developments and political evolutions in the Eurozone are already partially priced in into this forecast. Lower income growth is also likely to have an impact on unemployment (again above 10%) and insolvencies (+3% in 2019).
