By
TBY
| Morocco | Jan 14, 2025
Morocco’s resilience in the face of repeated external economic challenges bodes well for the short term, while heavy investment in infrastructure shows that the bigger picture remains in view.
Image credit: Shutterstock / Mikadun
Morocco, which the World Bank classifies as a lower-middle-income country, views itself as the gateway to Africa, vigorously promoting that enviable commercial status in pursuit of sustainable economic growth.
Notably, it remains the only African country to have inked a Free Trade Agreement with the United States.
Changes Underway
Structural changes are clearly underway in the Moroccan economy, with a shift away from agriculture towards greater labor productivity growth in lucrative sectors in evidence.
By official numbers, between 2000 and 2019, the share of Moroccan workers in agriculture fell 11.5 percentage points (p.p.), while industry gained 3 p.p. and services 8.4 p.p.
Overall economic growth of 3.4% in 2023 was fueled by private consumption among a rising middle class and revived tourism revenue.
The nation is also investing in infrastructure of a catalytic nature to develop key industries such as green energy, which it hopes will revive recently flagging foreign investment.
Initiatives to galvanize the private sector, meanwhile, feature the activation of Morocco’s Competition Council and amendments to Competition Law.
The S&P Outlook
S&P Global Ratings’ positive Morocco outlook of late 2024 was based on strong performance in the tourism, phosphates and derivatives, automotive, and aerospace sectors.
Acknowledging efforts to diversify the economic matrix and raise demand from Morocco’s primary trading partner, the Eurozone, the agency forecasts average GDP growth of 3.6% in 2024-2027, more than double the 1.5% of 2020-2023.
GDP growth dipped to just 1.3% in 2022, having rebounded 8% from COVID-19 a year earlier.
Yet, in 2023 it recovered to 3% territory amid resurgent tourism and exports.
S&P Global Ratings also observed that large-scale projects related to the 2025 Africa Cup of Nations and the Football World Cup in 2030, both headed for Morocco, would pay economic dividends.
Regarding infrastructure, the agency also noted that the port of Tangier-Med’s current capacity of three million 20-foot equivalent units rendered it the preeminent port in the Mediterranean and Africa.
Elsewhere, the Casablanca desalination plant currently under construction will be the largest on the continent, and will have an annual production capacity of 300 million m3.
To that may be added assorted projects addressing perennial water scarcity, including dams and water recycling plants, as well as measures to improve the efficiency of water consumption. The Finance Bill 2025 and three-year budget period of 2025-2027 will support such core projects.
IMF Considerations
Meanwhile, the IMF’s World Economic Outlook has forecast 2.8% GDP growth for 2024 and 3.6% for 2025.
Morocco forecasts GDP growth for 2025 at 4.6%, although Minister of Economy and Finance Nadia Fettah concedes that global developments are a factor.
The Fund foresees slightly lower average growth by 2029 of 3.4%.
The 2024 estimate exceeds the foreseen 2.1% growth for the Middle East and North Africa (MENA) region overall, although that metric rises to 4.0% in 2025.
The Fund also noted that Morocco’s economic outlook reflected continued reform and the establishment of the Mohammed VI Investment Fund, along with the adoption of a new investment charter conducive to private sector-led growth.
Wooing FDI
The World Investment Report 2024 notes that while Morocco ranked fifth highest FDI-generator on the African continent in 2022, the figure fell from USD2.26 billion to USD1.1 billion in 2023, citing the structural deficiencies of state bureaucracy, irregularity, and overly gradual regulatory reforms.
Morocco’s 2022 Investment Charter and its Development Model activated a year earlier—that identified costly high-emission energy generation as a disincentive to foreign investors—confirm a determination to attract FDI.
Renewables feature prominently in the equation.
The nation intends for renewables to comprise 52% of its installed energy-generating capacity by 2030 and to raise its renewable energy consumption from 19.5 to 40% by 2035.
The French Connection and Control of Western Sahara
Last year, Paris declared its support for Morocco’s territorial integrity in the Western Sahara, a position which has risked relations with Algeria.
Indeed, France has revamped its official map to reflect Morocco’s sovereignty over the region.
French President Macron even spoke of France’s “strategic duty” to advance bilateral relations in his address to the Moroccan Parliament in October.
It’s not empty rhetoric, as France remains Morocco’s second-largest trading partner (after the Euro-zone), claiming 14.2% of overall trade and in second place, too, as an importer (20.3%) and third as a supplier (10.6%).
Trade between Morocco and France reached USD16.3 billion in 2023, up 2.8% from 2022 and 34% from 2019.
Well over 1,000 subsidiaries of French firms are located in Morocco, positioning the nation as the foremost African destination for French FDI (USD1.1 billion as of 2023).
French electric energy giant Engie is pursuing multi-billion euro renewable energy schemes featuring green hydrogen and desalination in the country that promise substantial socio-economic development. In line with the above-mentioned realpolitik regarding Western Sahara, a recent example of Paris’ commitment came in 2024 when it agreed to play a role in developing the Dakhla-Oued Eddahab Region in Western Sahara.
Come back for regular updates on the Moroccan economy over 2025.
