MOROCCO’S ECONOMY SHOWS STRONG GROWTH PROSPECTS DESPITE RISING TRADE DEFICIT

Morocco’s economy is projected to grow 4.4 percent in 2025 and 4 percent in 2026, driven by robust domestic demand and investment, though concerns mount over a widening trade deficit that could reach 20.1 percent of GDP by 2026.
The High Commission for Planning’s exploratory economic budget reveals an economy gaining momentum despite global uncertainties. Domestic demand emerges as the primary growth engine, contributing 8.5 percentage points to expansion, powered by household consumption growth of 3.6 percent and investment surging 17.5 percent.
Economist Mohamed Jadri notes the economy is “gradually finding its cruising speed” between 4-5 percent growth, aligning with the New Development Model’s intermediate targets. The positive trajectory benefits from multiple factors including controlled inflation maintained between 1-2 percent, salary increases from social dialogue agreements, and direct social assistance reaching four million households.
However, structural vulnerabilities temper optimism. The trade deficit is expected to deteriorate from 19.1 percent of GDP in 2024 to 20.1 percent by 2026, as vigorous domestic demand drives import growth faster than exports. The current account deficit could reach -1.9 percent of GDP by 2026, highlighting increased dependence on external financing.
Investment efficiency raises additional concerns. Morocco’s Incremental Capital Output Ratio averaged 12.5 between 2010-2019, significantly higher than peer middle-income countries, indicating lower investment productivity despite high investment rates exceeding 31 percent of GDP.
While recent improvements show promise, with investment contribution to growth recovering to 1.2 points during 2021-2024, the persistent inefficiency questions Morocco’s ability to generate sustained, high-quality growth matching its ambitious development goals.