The African Development Bank (AfDB) has projected that Morocco’s gross domestic product (GDP) will rise to 3.5% in 2024 and strengthen to 3.8% in 2025, driven by higher investment.
In its latest report entitled “African Economic Outlook 2024″ issued on Thursday, the AfDB has predicted that inflation in Morocco will slightly decrease to 4.1% in 2024 and 3.8% in 2025, attributed to a global decrease in food prices. The budget deficit is expected to gradually decrease to 4.4% of GDP in 2024 and 4.2% in 2025, benefiting from economic recovery and reduced subsidies on butane gas prices.
The AfDB has also projected that Morocco’s current account is likely to show a small deficit of 0.4% of GDP in 2024, which may worsen slightly to 0.9% of GDP in 2025 due to increased imports.
The bank noted that potential growth could be hampered by poor rainfall, and sluggish economic growth in the European Union, impacting Morocco’s terms of trade. Heightened tensions resulting from Russia’s invasion of Ukraine could potentially lead to another spike in food prices. “Risk mitigation factors include implementing structural mechanisms to manage climate shocks and natural disasters and the royal social protection initiative,” AfDB said.
Morocco’s structural transformation has been slow and has seen a gradual shift towards the services sector over the years, with a decline in the agricultural workforce in favor of services and industries. From 2011 to 2022, the services sector contributed to 52% of GDP and employed 42.3% of the working population, while the industry sector accounted for around 25% of GDP, with manufacturing making up 14.7%. Manufacturing’s share of employment decreased from 12.2% in 2000 to 11% in 2019 while agriculture accounted for approximately 35% of employment in 2011–2022.
The AfDB highlighted that Morocco has unveiled a new development model geared towards enhancing structural transformation and promoting inclusivity. The model focuses on fostering trade integration in manufacturing, bolstering infrastructure connectivity, and enhancing human capital development.
It also urged Morocco to take advantage of increased Special Drawing Rights at the International Monetary Fund, partial guarantees of credit risk from multilateral development banks, and climate funds to mitigate water stress. It also suggested Morocco should position itself in global value chains, mobilize more domestic resources by developing the private sector, rationalize tax spending, and make public procurement more open to micro, small, and medium enterprises.