Morocco Economic Forecast

GDP growth last year was less than half the average of the preceding 10 years. In Q1 of this year, GDP growth picked up to 3.5% on a surge in tourism and automobile exports. In Q2, GDP grew 3.2%, according to a provisional estimate, with agricultural production rising more weakly than in the prior quarter due to a drought. In other news, the country has had recent success in encouraging investment in the manufacturing sector. In June, a Chinese company announced that it was planning to build Africa’s first ‘gigafactory’ for batteries in Morocco. Then, in August, another Chinese firm decided to relocate a planned USD 280 million lithium-battery factory from the Czech Republic to the country. Meanwhile, the government said in August that it would reintroduce financial support for truckers in September, according to media reports, likely straining the fiscal balance.

Inflation fell to 4.9% in July, a 17-month low (June: 5.5%). Inflation should average lower this year than last on a base effect and recent rate hikes. That said, our panelists have upped their forecasts for average inflation in 2023 by 1.9 percentage points since the start of the year. El Niño is a key upside risk ahead due to its effect on global agricultural output.