Posted by: Morocco World News
BMI Research of Fitch Group has forecast that Morocco’s GDP growth will moderately slow in 2018 and 2019 compared with the high rate it recorded in 2017.
Although BMI expects slow growth, it is still optimistic about Morocco’s GDP regional average, thanks to the key growth drivers of tourism and foreign investment in aeronautical and automotive manufacturing industries.
GDP growth above regional average: Tourism and manufacturing
Although above the regional average, GDP growth is expected to be at 3.5 percent in 2018 and 3.3 percent in 2019, falling short of the 4.1 percent growth in 2017, which was boosted by a fruitful agricultural season.
In 2017, agriculture accounted for 12.8 percent of real GDP. According to BMI, “agricultural output expansion rates underpin the view for real GDP growth to slow in 2018.”
BMI maintains that tourism, next to the manufacturing sector, will continue to be the driving force for growth in the country.
According to the World Travel & Tourism Council, tourism growth will have a positive impact on both domestic consumption and exports, resulting in major growth.
Morocco’s Tourism Observatory recently reported that 4.1 million tourists visited the kingdom between January and May 2018. The number of annual foreign tourist arrivals increased by 15 percent from the previous year.
BMI explained that tourism is highly dependent on European demand, especially from France and Spain as the two countries accounted for 49.0 percent of the visitors in Morocco in the first four months of 2018.
Expectations for upcoming quarters
BMI expects the manufacturing sector to grow thanks to the booming activities of the automotive and aeronautic industry in addition to phosphates processing.
However, the sector’s momentum will slow in 2019 on the back of weaker demand from key export markets.
On the other hand, vehicle production is expected to grow by an annual average of 17.4 percent over the quarters of 2018 and 2019.
BMI explains: “These investment flows are underpinned by the government’s extensive support and incentive programmes, and an increasingly favourable investment climate.”
Of Morocco’s exports, 46.6 percent go to Spain and France. BMI forecasts that exports of goods and services will grow slowly from 2019 onwards, “softening headline growth.”
Fluctuations in agricultural output
Fluctuations in the country’s agricultural activity hinder its economic growth. According to BMI, the Moroccan economy will remain very vulnerable to shifts in agricultural output as the country’s farms are still reliant on rainfall.
Therefore, bountiful rains will significantly boost yields and economic output.