A number of key developments in Morocco are expected to support economic growth in coming years. A rapidly improving business environment and infrastructural base, the gradual liberalisation of the local currency and increased investment into export-oriented industries are all set to raise living standards and drive the emergence of a large national middle class. Broader growth is not without its challenges, however, and officials are likely to put more effort into overcoming entrenched socio-economic problems and stubborn unemployment. Still, the medium-term upward trajectory of the nations’ GDP also appears to be holding steady, which will bring added help in tackling such issues.


Morocco’s GDP grew by 4.1% in real terms in 2017 to reach $109.1bn, the latest year for which full-year data is available from the kingdom’s statistics and planning body, the High Commission for Planning (Haut Commissariat au Plan, HCP). This was up from 1.1% the previous year, the lowest level witnessed in the kingdom since 1999, and down slightly from 4.5% in 2015.

Primary activities, including agriculture and fishing, accounted for 12.4% of GDP in 2017; secondary activities, including industry, electricity and water provision, and construction, accounted for 26.1%; and tertiary activities, such as the services industry, accounted for 50% of GDP, according to the HCP. Individually, leading sectors include the services industry, which contributed 24.5% to GDP in 2017, followed by transformative industries (15.7%), agriculture (11.3%) and public administration (9.2%).

Because of its weight in the economy, agriculture still has sufficient effects on annual growth rates in Morocco. The economy’s robust performance in 2017 was driven to a large extent by a 15.4% expansion in agricultural output, as a result of good rains during the planting season and consequently a strong harvest. Indeed, agricultural performance heavily influences overall growth most years in Morocco, as the sector’s performance is highly volatile and based on the variability of harvests. Furthermore, World Bank statistics show that around 37% of the total workforce was employed in agriculture in 2017, meaning the sector’s performance has knock-on effects on demand. In keeping with this trend, low growth in 2016 was accompanied by a 13.7% contraction of the agricultural sector.

While full-year statistics for 2018 have yet to be released, the latest data from the HCP shows that GDP grew by 2.9%, 2.4% and 2.8% in the first, second and third quarters of 2018, indicating a moderate performance. In October the HCP estimated fourth quarter growth would reach 2.9%. While estimates vary slightly, in the October 2018 update of its “World Economic Outlook” report, the IMF forecast growth of 3.3% for the whole of 2018, in line with the 3.3% prediction made the same month by Bank Al Maghrib (BAM), Morocco’s central bank.

Such a level would be on par with medium-term trends, which, despite the volatility in agricultural yields, averaged 3.4% from 2012 to 2017. With regard to future trajectories, BAM predicts the economy will expand by 3.2% in 2019; while the IMF forecasts medium-term growth to improve again, rising to 4% in 2019 and remaining there in the five years to 2023. The 2019 state budget is based around anticipated GDP growth of 3.2%, and will see overall spending will rise by 8.8%, to Dh443.4bn (€39.9bn, see analysis).

Income & Inflation

With a per capita GDP of €3007 in 2017, according to the World Bank, Morocco is classified as a lower-middle-income country. To compare, per capita income levels in Algeria and Tunisia – Morocco’s Maghreb peers – stood at €4123 and €3491, respectively, while the MENA region averages €7450.

In terms of purchasing power parity, the kingdom ranks as one of the region’s poorer countries, with an adjusted GDP per capita standing at $8218 international dollars in 2017, behind Tunisia ($11,910), Algeria ($15,280) and the MENA region ($19,890).

Per capita wealth, however, has been rising steadily in real terms, from $5830 international dollars (fixed in 2011 prices) in 2007 to $7490 a decade later. Real term adjusted growth was relatively slow in the 1990s, at just 10% over the course of the decade, but has been rising at a faster pace since then, expanding by 66% in the 2000-17 period.

Inflation Rate

While 2018 saw an uptick in average consumer prices, Morocco experiences relatively low levels of inflation. According to the IMF, in 2018 inflation increased by 2.4%, up from 0.7% in 2017, 1.6% in 2016 and 1.5% in 2015. Since 2000 rates have never exceeded 4%, and have only risen above 2% on four occasions. IMF projections see inflation moderating to 1.4% in 2019, and remaining around the 2% mark up to 2023.


The dirham is pegged to a basket of currencies. In April 2015 BAM reduced the weight of the euro in the dirham’s value from 80% to 60%, and increased the participation of the US dollar from 20% to 40%. The central bank has long been working on measures to gradually liberalise the peg, and in January 2018 widened the margin in which it allowed the dirham to fluctuate, from 0.3% on either side of its target rate to 2.5%. Despite such efforts, however, it is unlikely the transition to a full free float will happen in the near or medium terms, with some reports suggesting the entire process could take an additional 15 years to complete. While the peg does limit the central bank’s freedom in terms of monetary policy, capital controls in place allow it some degree of independence. The bank’s policy rate stood at 2.25% as of February 2018, a level at which it has remained at since March 2016.

Attracting Investment

A large part of Morocco’s ability to post stable growth rates over the past several years has been its capacity to attract foreign capital. Foreign direct investment (FDI) reached €2.65bn in 2017, according to the Office des Changes. That year, the UN Conference on Trade and Investment ranked the kingdom as the second-largest recipient of FDI in North Africa, behind Egypt, and the fifth-largest in Africa as a whole (see analysis). In 2018 FDI grew by 34% in 2018 to Dh32.8bn (€3bn).

Outside of Africa, Morocco’s stable and attractive investment environment is also attracting investors. “There are already 64 Japanese companies in Morocco, and we anticipate that the number will only continue to grow,” Yoichiro Ishibashi, country general manager at the Japan External Trade Organisation, told OBG. “The kingdom’s political stability, continued economic growth, geographic proximity to Europe and Africa, numerous free trade exchanges and the multitude of financial incentives make Morocco an attractive destination for business.”

Foreign Trade

The EU is the kingdom’s largest trade partner by far, accounting for 59.4% of total Moroccan trade in 2017, according to the latest fullyear statistics from the Office des Changes.

By country, Spain was the largest source of Moroccan imports in 2017, accounting for Dh7.38bn (€663.8m), followed by France (Dh5.25bn, €472.2m) and China (Dh3.95bn, €355.3m). Spain is also Morocco’s largest export market, with 2017 sales of Dh33.9bn (€3.05bn), followed again by France with Dh32.8bn (€2.95bn). The two are by far the largest buyers of Moroccan goods, with Italy in third place with purchases of Dh6.28bn (€564.8m).

Officials have worked to establish a solid network of international trade agreements over the years, encompassing free trade deals with Canada, the US and Turkey, as well as being part of the European Free Trade Association – made up of Iceland, Lichtenstein, Norway and Switzerland. Furthermore, under the Agadir Initiative of 2004, preferential trade ties with Jordan, Egypt and Tunisia are well established. In November 2017 Morocco started technical negations with the Mercosur group of countries, including Argentina, Brazil, Paraguay and Uruguay, to pave the way for a free trade agreement.

Balance of Trade

The value of imports rose by 8.3% to Dh520.9bn (€46.8bn) in 2018, according to the Office des Changes. A major contributor to the increase was the growing value of energy imports – including coal, petroleum, and gas and fuel oils – by 18.3% to Dh82.2bn (€7.4bn).

This was counteracted by elevated prices in a number of key products, which helped the value of exports grow by 7.6% in 2018, to reach Dh404.5bn (€36.4bn). Exports were led by a 10.7% rise in the value of motor vehicles and auto parts to Dh65bn (€5.8bn). Automobiles have remained the kingdom’s largest export since 2015, thanks to investment from major car manufacturers, such as Renault and Peugeot. This was followed by phosphates and phosphate-derivatives, which increased in value by 17% to Dh51.7bn (€4.6bn), due to a rise in commodity prices.

However, despite this boost to exports, the trade deficit increase by 10.9% to Dh116.4bn (€10.5bn) in 2018. The government is working to reduce this through the development of its green energy sector, with plans to provide 32% of national electricity consumption with renewable sources by 2020, to be increased to 52% by 2030 (see Energy chapter).

The structural trade deficit is also partially offset by substantial tourism receipts, as well as remittances from Moroccans living abroad, mostly in Western Europe. The value of tourism receipts stood at Dh73.2bn (€6.6bn) in 2018, up 1.5% on 2017. Remittances moderated somewhat, falling by 1.7% to Dh64.8bn (€5.8bn), although this is still up on the previous three years. According to the latest available data, France made up the largest source of remittances in 2016, with Dh22.3bn (€2bn), or 35.6% of the total; followed by Italy with Dh6bn (€539.6m, 9.6%); and Spain with Dh5.4bn (€485.7m, 8.7%).

Despite such income streams, the large imbalance of trade means that the kingdom also runs a current account deficit. The IMF estimated this at 3.59% of GDP for 2017, and in October 2018 forecast that the figure would rise to 4.27% in 2018 and remain at a similar level in the subsequent two years. While elevated, the deficit is down sharply since its peak of 9.3% in 2012, thanks in part to lower oil prices from end-2014 to mid-2017, as well as an end to a number of government fuel subsidies (see analysis).

Building Partnerships

As is the case in many countries seeking to contain public deficits while developing infrastructure, Morocco is increasingly keen to make use of public-private partnerships (PPPs) to finance capital spending. The segment is already reasonably well developed; according to the World Bank’s PPP Knowledge Lab, as of February 2018, €18.5bn in infrastructure investment across 20 projects has been made via PPPs since 1990, mostly in water and electricity generation projects.

This decade has seen a particular focus on solar energy projects as part of the government’s ambitious renewable energy plan to reduce reliance on costly fuel imports (see Energy chapter). In 2014 the government introduced a new law on PPP contracts in order to encourage the development of the sector through better regulation. However, the authorities are keen to further speed up the pace of such projects, with Mohamed Benchaâboun, the minister of economy and finance, announcing in December 2018 that bolstering investment in the kingdom was dependent on the development of more PPPs.

Several problematic aspects of the current framework have already been identified, and as of December 2018 a new piece of legislation regarding the financing model had been released for public consultation. In its draft form the law included measures such as widening the application of the PPP regime to include local government projects, as well as the establishment of a government PPP commission to develop a national strategy. The commission will also have the power to approve PPP contracts without tender under exceptional circumstances, as well as the authority to exempt key projects from customary procedures, such as government assessments, to fast-track their implementation in the event of a time crunch. A report issued in December 2018 alongside the draft 2019 Finance Law anticipates Dh12bn (€1.1bn) in investment via PPPs over that year, and identified 59 new projects that could be funded through the model, including 26 in the transport sector and 23 in higher education.


Overall, the kingdom’s unemployment rates have remained elevated yet stable in recent years, despite the uptick from 9.9% in 2016 to 10.2% in 2017. The latest data from the HCP shows unemployment standing at 10% in the third quarter of 2018, down from 10.6% quarter-on-quarter. Such figures have remained around the 10% mark since the mid-2000s, though it is down sharply from figures of over 20% in the mid-1990s. The IMF expects that the unemployment rate will gradually decline in subsequent years, from 9.2% in 2019 to 8.2% in 2023.

There is still a discrepancy between unemployment rates in urban and rural areas, with the former standing at 14.3% in the third quarter of 2018, compared to 3.9% in the latter. Age also plays a part, with the youth unemployment rate for those between the ages of 15 and 24 reaching 27.5%. The kingdom suffers from underemployment, and 9.7% of the working population is underutilised. The labour force participation rate is also low at just 45.5% of the population. As is the case throughout the region, the female labour force participation rate is below average, standing at 24.9% in 2018, according to the World Bank.

Recognising the problem, the government plans to reduce unemployment through a variety of strategies and initiatives. Prominent among these is the Industrial Acceleration Plan 2014-20, a general strategy for industrial development that seeks to create 500,000 new jobs in various industrial sectors, including automotive, agro-industry, textiles, aeronautics and fishing, by 2020. The programme, which started in 2014, created 52,376 jobs in 2016 and almost 90,000 in 2017. The authorities have also adopted a new National Plan for the Promotion of Employment in early 2018, which includes an emphasis on better education and training, as well as the organisation of a conference aimed at developing a national employment roadmap.

Officials are also encouraging informal and smallscale entrepreneurs to register themselves with state tax authorities. Amendments passed as part of the 2019 Finance Law halved the income tax charged to such entrepreneurs as an incentive to bring them into the formal sector. At the end of 2018, 60,000 people had registered, with the state aiming to increase the figure to 100,000 by 2020. The 2019 Finance Law will also wipe out previous state loans to young entrepreneurs to encourage job creation. Meanwhile, a new legal reform will boost small and medium-sized enterprises by grouping together all of the incentives and support measures for the segment under a single legislative framework.


In line with a strong emphasis on education and employment, the government is seeking to reform the kingdom’s education system to meet the needs of a modern global economy. Plans for legal reform in the sector and efforts to improve vocational training are currently under way to ensure that the skills of young Moroccans better match the needs of the private sector. “In the past the government placed little investment into education and training of the country’s human resources. Instead, the development focused on hard infrastructure,” Mehdi El Yousfi, general manager at Moroccan recruitment agency DIORH, told OBG. “The country is now significantly behind in the development of three primary areas, education, health care and justice.

Recognising that education and training are key to developing a strong economy, in September 2018 Saïd Amzazi, the minister of national education, vocational training, higher education and scientific research, outlined plans for a new generation of vocational training centres. The centres are designed to take into account each region’s specificities to better meet the requirements of the local job market as well as comply with regional development plans. The initiatives are also partly aimed at addressing less-than-favourable views of vocational training, which are largely regarded as an avenue for poorly performing students. Key targets include increasing the number of young Moroccans in professional training by 10% to 478,000 students in the 2018/19 academic year, and boosting the number in apprenticeship programmes by one-third to 41,500 in total.


Morocco’s strategy of promoting economic development through investment in industry has witnessed success, in particular in the automotive and aeronautics sectors (see Industry chapter). The rapid improvement in the business environment (see analysis), as well as ongoing work to upgrade infrastructure augur well for further investment. In the long term, plans to develop renewable energy should help substantially reduce the kingdom’s reliance on energy imports. Meanwhile, the IMF’s renewal in December 2018 of the Precautionary and Liquidity Line arrangement – a tool provided only to countries the fund deems to have broadly sound economies and policies in place – also underscores the confidence international institutions have in Morocco’s potential. This will perhaps contribute to growth and lower unemployment in the future.