OECD Economic Outlook, Volume 2025 Issue 2

Morocco

Real GDP growth in Morocco is projected to reach 4.5% in 2025, 4.2% in 2026 and 4.0% in 2027. Robust domestic demand will be the primary driver, with consumption supported by higher real incomes and infrastructure investment bolstered by the hosting of major international sporting events. The agricultural sector has strongly rebounded after the 2023‑2024 drought, and tourism continues to grow vigorously. Risks are slightly skewed to the downside. The industrial sector may grow faster than expected, but agriculture remains vulnerable to climate shocks. Uncertainty, tariffs, and geopolitical tensions could suppress external demand further and widen the trade deficit.

The recent fiscal reform has helped to narrow the fiscal deficit, which is expected to approach 3% of GDP in 2027. The gradual fiscal consolidation will help strengthen macroeconomic stability. Maintaining monetary policy interest rates at their current level is appropriate given expected inflation dynamics. Decisive policies are needed to tackle informality and corruption and enhance competition.

Domestic demand has sustained growth

Consumption grew substantially in the first two quarters of 2025, supported by rising purchasing power and greater consumer confidence as inflation eased. Infrastructure investment continues to drive overall investment growth, boosted by Morocco’s role as host of major events. The tourism sector has maintained robust momentum, with more than 16 million tourists visiting in the first ten months of 2025. The agricultural sector has rebounded in 2025 after drought conditions in 2023 and 2024, but remains highly vulnerable to climate shocks. Lower oil and food prices have pushed inflation down, with annual headline inflation averaging 0.9% and core inflation 1.2% over the first ten months of the year.

Robust domestic demand and subdued global demand due to uncertainty and geopolitical tensions have caused imports to outpace exports, widening the current account deficit. Both import and export growth are expected to remain vigorous. Vibrant household consumption has boosted imports of consumer goods, and the expansion of the manufacturing sector has increased imports of energy and intermediate inputs. The rebound in agricultural products has revitalised food exports, while a diversification of export markets has enhanced export resilience.

Morocco

1. Four quarters moving average.

Source: OECD Economic Outlook 118 database; and Haut commissariat au Plan, DCN.

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Morocco: Demand, output and prices

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The fiscal deficit is expected to narrow gradually, while monetary policy interest rates are on hold

After bringing the policy rate to 2.25% in March 2025, the central bank paused its easing cycle despite inflation declining substantially in 2025. Given that both headline and core inflation could rebound in 2026 and 2027 as some disinflationary factors subside, the central bank should maintain the present interest rate and continue to follow a data-driven approach. The fiscal deficit is expected to be around 3.7% of GDP in 2025 and then narrow gradually despite robust spending growth driven by public infrastructure investment and the extension of health care coverage. This downward trajectory is projected to bring the deficit to 3.2% of GDP by 2027, helped by sustained economic growth and the fiscal reform recently implemented by the government that has increased fiscal revenues. These factors are also expected to contribute to the gradual reduction of the public debt, which stands around 67% of GDP in 2025.

Growth is projected to remain strong in 2026 and 2027

Economic activity is expected to grow by 4.2% in 2026 and 4.0% in 2027. Consumption growth is projected to remain robust but moderate slightly as inflationary pressures, mainly due to external factors, weaken disposable income growth. Infrastructure investment will continue to support domestic demand and underpin expansion in the manufacturing and construction sectors. Strong growth in tourist arrivals and receipts is expected to persist. Formal employment is gradually increasing, with the unemployment rate projected to decline to 12.6% by 2027. However, persistently high youth and female unemployment remains a challenge. Risks are slightly tilted to the downside. On the positive side, the manufacturing sector may grow faster than expected. On the negative side, uncertainty, tariffs and geopolitical tensions may weaken projected external demand and widen the trade deficit. The agricultural sector could suffer heavily in the event of new droughts.

Levelling the playing field would foster stronger growth

Enhancing market competition by continuing to reform State-owned enterprises (SOEs) and tackling corruption and informality is key for Morocco. Rationalising budgetary transfers to SOEs and enhancing their performance will also augment dividends to the State budget and contribute to levelling the playing field. Adopting legislation regulating lobbying activities would strengthen transparency, while promoting further digitalisation would reduce the need for face-to-face interactions and keep record of all transactions. Requiring the division of large public contracts into smaller lots would help tackle corruption and favour competition in the large public procurement market. Increasing the flexibility of labour contracts and reducing employer contribution rates for those on low wages would help to tackle informality, and efficiency-enhancing competition would be fostered also by strengthening competition policy enforcement.