Morocco: Growth under a job ceiling

5 min

Economic growth reached +4% in 2017 after +1.2% in 2016. This performance was widely expected, since the agricultural output recovered (+14.8%) after poor rains in 2016 (-12.8%). Aside from this volatile factor, non-agricultural output also gained momentum, growing by +2.7% in 2017 (after +2.2% in 2016), the fastest pace since 2012. Moreover, non-agricultural sector growth accelerated throughout the year to +3.1% y/y in Q4, driven by the manufacturing sector and services (notably tourism). Construction and public spending weighed somewhat on the cyclical momentum. Government consumption (education & health) grew by a mere +0.3%, however, this helped to reduce the fiscal deficit to -3.5% of GDP, from -4.1 in 2016. Among the bad news, unemployment deteriorated from 9.9% in 2016 to 10.2% in 2017. Employment increased by +0.8% but it was insufficient to cope with new entrants, and the youth unemployment rate was 26.5%. The job market is among remaining bottle¬necks inhibiting the overall growth potential. In 2018, the economy is forecast to grow by about +3%.