Morocco flag Morocco: Economic and Political Overview

The economic context of Morocco

Economic Indicators

In recent years, the Moroccan economy has been characterised by macroeconomic stability and low levels of inflation, relying mostly on exports, a boom in private investment, and tourism. However, the COVID-19 shock has pushed the Moroccan economy into its first recession since 1995. The country’s GDP rebounded in 2021 but showed modest growth in 2022: based on the most recent projections from the IMF, the economy is estimated to have grown by 2.4% in 2023. This growth is fueled by a partial rebound in agricultural output, net exports, and services (particularly tourism). The recovery is anticipated to strengthen in the medium term, with real GDP growth forecasted to reach 3.6% in 2024 and 3.2% in 2025, as domestic demand gradually rebounds from recent shocks. Reconstruction efforts and new policy incentives are set to enhance investment, thereby supporting income and consumption, while the resurgence of agricultural production should contribute to the growth of rural employment.

The fiscal impact of the health and social protection reform and postponement of the liquefied petroleum gas and flour subsidy reform slowed the consolidation of the budget deficit, which was estimated at 5% of GDP in 2023. Modest revenue growth (+0.9% year-on-year through September) has been sustained by increased tax collections. However, government spending has experienced upward pressures (+7.2% year-on-year) due to the impact of the drought on food supply and high inflation. While gas subsidies were lower than budgeted, there were increases in subsidies for food and farmers, along with accelerated investment in water infrastructures (Fitch Ratings). The deficit is expected to decrease over the forecast horizon, to 4.4% this year and 3.8% in 2025 (IMF), with the debt-to-GDP ratio following a similar trend (from 69.7% in 2023 to 68.7% by 2025). After peaking in February, inflation averaged 6.3% in 2023, as energy prices declined and agriculture output improved. The projection indicates a gradual decrease to 3.5% in 2024 (IMF), influenced by reduced energy and food prices and the impact of rising interest rates. Key risks include prolonged droughts affecting agricultural production, a more pronounced slowdown in crucial European markets, and a potential further increase in commodity prices.

Albeit its high levels, the unemployment rate has been declining in recent years and averaged 12% in 2023. For 2024 and 2025, the IMF expects it to decrease to 11.7% and 11.6%, respectively. According to the Moroccan Higher Planning Commission, unemployment particularly affects the youth (15-24 years of age – at 38.2% as of June 2023 – latest data available), recent graduates, and women (19.8% each). The rate of poverty remains one of the highest in the Mediterranean region, with almost one-fifth of the population living near the poverty line. Finally, the GDP per capita (PPP) was estimated at USD 10,408 in 2023 by the IMF.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 130.91143.96152.38161.44170.86
GDP (Constant Prices, Annual % Change) 1.33.03.13.33.4
GDP per Capita (USD) 3,5703,8894,0784,2814,490
General Government Balance (in % of GDP) -5.3-4.5-4.4-3.9-3.3
General Government Gross Debt (in % of GDP) 71.670.670.469.468.2
Inflation Rate (%) 6.66.12.22.52.4
Unemployment Rate (% of the Labour Force) 11.813.012.011.511.0
Current Account (billions USD) -4.62-2.13-4.01-4.74-5.04
Current Account (in % of GDP) -3.5-1.5-2.6-2.9-3.0

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Given the richness of Morocco's soil, the agricultural sector is pivotal for the country’s economy, employing 35% of the workforce and contributing 10.5% of GDP (World Bank, latest data available). Barley, wheat, citrus fruits, grapes, vegetables, argan, olives, livestock and wine are the country's main crops. In recent years, the government has focused on the sector through its "Green Morocco Plan" and the Agricultural Development Fund. The country’s cereal production is highly variable, with local dams providing irrigation for only 15% of the agricultural land and rainfed agricultural production accounting for 85% of the aggregate output (FAO). According to preliminary data by the national statistical office, the added value of the primary sector in volume, adjusted for seasonal variations, recorded an increase of 8.9% in the third quarter of 2023 compared to a decrease of 13.8% during the same period one year earlier, thanks to a rise in agricultural activity by 5.7%, and in fishing by 80.7%. Overall, the agricultural sector recorded a forecasted growth rate of 3% for the 2022-2023 campaign, compared to -14.8% in the previous one, showing significant resilience despite unfavourable weather conditions and cyclical imbalances.

Industry contributes 25.5% of the GDP and employs 23% of the workforce. The main sectors are textiles, leather goods, food processing, oil refining, and electronic assembly. However, new sectors have been booming: chemistry, automotive parts, computers, electronics and the aerospace industry. The automotive industry, in particular, has been growing in the last decade, with double-digit annual growth in terms of job creation and exports (becoming the country’s main exporting sector and Africa’s main automotive hub). Overall, the manufacturing sector is estimated to account for 15% of GDP. The emergence of new industries should allow the country to reduce its dependence on the agricultural sector. Morocco’s industrial sector is the largest beneficiary of foreign direct investment. The country has around 75% of the world's estimated reserves of phosphates, and the mineral sector accounts for almost 30% of exports (Oxford Business Group). Mining accounts for 10% of GDP, of which 90% derives from phosphates. The manufacturing industries' activity experienced a modest increase of 0.6% in 2023, compared to 0.3% the previous year. This development was mainly attributed to the decline in the chemical industry by 4.1%, weakened by the decrease in the production of phosphate fertilizers, and the slowdown in the agro-food and textile industries due to the rise in production costs (National Statistical Office).

The services sector accounts for more than half of GDP (54.5%) and gives employment to 43% of the workforce. It is spearheaded by real estate and tourism, which has been very dynamic in recent years (accounting for around 11% of GDP and hitting a record of nearly 13 million arrivals in 2019). Although tertiary activities recorded a downward trend following the outbreak of the COVID-19 pandemic, with a particularly weak tourism performance, improvements were achieved in 2022 and 2023: tourist arrivals in Morocco reached 13.2 million during the first eleven months of 2023, surpassing their pre-Covid-19 pandemic levels. Finally, the Moroccan banking sector is dominated by locally owned banks, which account for more than 80% of industry assets (U.S. Department of Commerce).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 34.6 22.8 42.6
Value Added (in % of GDP) 10.7 27.2 52.3
Value Added (Annual % Change) -15.3 -0.4 5.3

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
63,3/100
World Rank:
81
Regional Rank:
9

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
5.48/10
World Rank:
61/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of Economy and Finances
Ministry of Industry and Commerce
Ministry of Administration Reform
Department of Energy and Mines
Department of Tourism
Statistical Office
High Commissioner for Planning
Central Bank
Bank Al-Maghrib
Stock Exchange
Casablanca stock exchange
Economic Portals
Directorate General of the Treasury
 

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Latest Update: June 2024