Country Economic Forecasts > Morocco

GDP growth slowed to 1.7% in Q1 2016. As anticipated, the agricultural sector struggled, but the 9% contraction was more severe than expected. The non-agricultural sector posted modest growth of 2.4%, driven by manufacturing. Growth is expected to slow further to 1.4% in Q2, and we have cut our 2016 forecast to 1.4%, down sharply from 4.4% in 2015. The medium-term outlook improves as agriculture rebounds, Eurozone demand remains fairly solid and the effect of fiscal consolidation eases GDP growth is seen at 3.8% in 2017 and then 4% in 2018-19.Consumer price inflation increased to a 10-month high of 1.9% in May as food price inflation accelerated resulting in an upward revision of our forecast of 2016 inflation to 1.5%. But the budget deficit is projected to narrow slightly to 4.1% of GDP in 2016 as revenue growth remains slow. The fiscal account will be helped by lower subsidies owing to low world commodity prices and a contained wage bill, which rose by only 0.5% in H1. From 2017, stronger revenue growth is expected to result in a further narrowing in the budget deficit.