RABAT- Morocco's economic growth is expected to have dipped to 2.7 percent in the fourth quarter of 2018 from 3 percent the previous quarter, the planning agency said on Wednesday, citing a slowdown in non-agricultural activity.

Non-agricultural growth is expected to stand at 2.6 percent in the fourth quarter, down from 3 percent a quarter earlier due mainly to lower industrial output, the agency said in a statement. The agricultural sector, which accounts for about 14.5 percent of the North African country’s gross domestic product, is expected to have dropped to 3.4 percent from 3.8 percent compared to the previous quarter.

Morocco had announced an exceptional cereals harvest for 2018 totalling 10.3 million tonnes, up 7.3 percent from 2017, including 4.91 million tonnes of soft wheat, 2.42 million tonnes of hard wheat and 2.92 million tonnes of barley.

But a slow pace in harvesting as well as instability and high prices in the international market have pushed the government to maintain the suspension of customs duty on soft wheat until April 30 to avert flour and bread price hikes and ensure regular supply.

Fixed capital formation rose 4.3 percent in the fourth quarter from 2.2 percent a quarter earlier, while money supply growth rose to 4.3 percent from 3.5 percent during the same period.

Growth is seen falling to 2.5 percent in the first quarter of 2019 as the agency expects a lower cereals output.

The agency expects Morocco’s economic growth to drop to 3.1 for the whole 2018 down from 4.1 percent in 2017.

The central bank forecasted 2018 growth at 3 percent, followed by a 3.1 percent expansion in 2019. The government expects 3.6 percent growth in 2018 and 3.2 this year.

(Reporting by Ahmed Eljechtimi Editing by Richard Balmforth) ((ahmed.eljechtimi@thomsonreuters.com;))