Growth unexpectedly decelerated in Morocco in Q2 to +2.4% y/y from +3.2% in Q1, its slowest pace since 2016. Expectations were met in the agricultural sector where growth was +3% y/y in Q2. The non-agricultural GDP surprised on the downside with subpar growth (+2.3% y/y). Higher prices weighed on overall growth performance since prices grew by +1.8% y/y in Q2. Against a background of low inflation in Morocco, corporates were pressured on their margins. This price pressure, as well as the stagnation of the construction output (+0.9% y/y), weighed on investment and inventories (+0.1% together). Export growth also weakened, to +6.7%, cutting overall GDP growth performance by -0.5pp from what was seen one year ago. As a result, growth decelerated to +2.7% from +3.2% in Q1 in export driven processing industries. Lower utilities output growth (+3.1%) also suggests that this growth deceleration was quite broad-based and should have an impact also on Q3. Overall, we expect growth to land at +3% in 2018 (after +4.1% in 2017).
