Supported by its favourable geographic location between Africa and Europe, vast array of natural resources and improved business environment, Morocco’s economy has made important strides over the past decade. Investment in export-oriented manufacturing industries is gradually allowing the country to diversify its economic output. In hand with this, years of investment in infrastructure have strengthened transport and logistics links across the country, facilitating domestic and international trade.

Despite these positive dynamics, Morocco continues to face a number of economic challenges. Annual growth rates remain intrinsically linked to agricultural production. In addition, persistent unemployment rates, especially among young Moroccans, have prevented large segments of the population from joining the middle class, and subsequently spurred the emigration of qualified graduates and professionals abroad. Aiming to avoid economic stagnation and facing growing demand for more inclusive growth, the authorities have focused on leveraging the positive results achieved through past policies for a renovated growth model. “From the perspective of the private sector, the current growth rates, although positive, are not enough to fully improve social indicators for the entire population, and the government is aware of this,” Saad Hamoumi, CEO at local business development consultancy Harvard Consulting, told OBG.


Even while it faces structural challenges, Morocco’s economy has been able to maintain a stable growth pattern. According to figures from the IMF, the kingdom’s total GDP reached $118.5bn in 2018, up from $92.5bn a decade earlier. GDP per capita reached $3366 in 2018, a 14.2% improvement on 2008 figures. Because of the strong correlation between agricultural output and the availability of disposable income, annual variations in GDP growth tend to be influenced by rainfall and subsequent cereal output. Additionally, the country’s dependence on international energy imports leaves it significantly exposed to fluctuations in international oil prices, something that the government has been trying to mitigate through the development of renewable energy generation capacity over the past decade. However, the prolonged decline of international oil prices from mid-2014 onwards has helped the kingdom to maintain economic stability.


The agriculture sector has a significant influence on growth, with agricultural output variations leading to steep increases and drops in GDP expansion. For instance, after securing a 4.5% increase in real GDP in 2013, the following year saw growth settle at 2.7%. After GDP growth jumped to 4.6% in 2015, growth rates fell to 1.1% in 2016. This volatility in economic growth rates has become a regular component of the Moroccan economy. “In a good year, we will have about 2.5% growth in the non-agriculture economy and 2.5% growth in the agriculture sector,” Hicham Bensaid Alaoui, the risk, information, claims and collection director at Euler Hermes ACMAR, a Moroccan credit insurance company, told OBG. “If the agriculture sector performs poorly, it impacts the country’s overall economic performance.”

GDP growth reached 3% in 2018 and was expected to slow slightly to 2.7% in 2019, largely as a result of a 49% reduction in the kingdom’s cereal production. An improved cereal harvest over the 2019/20 season was initially projected to push GDP growth back up to about 3.7% in 2020, according to IMF and government estimates published in mid-2019. However, by mid-December 2019 the kingdom’s central bank, Bank Al Maghrib (BAM), had revised its projections for 2019 slightly, expecting GDP growth for the year to settle at 2.6%. BAM forecast GDP growth would rebound to 3.8% in 2020, based on the estimate of the country’s grain output reaching roughly 8m tonnes.


Mobilising financial resources and reducing budget deficits have increasingly become priorities for the authorities. Between 2012 and 2017 the country’s budget deficit was significantly reduced, from some 7.3% of GDP to 3%. The budget deficit was expected to hover around 3.7% of GDP for 2019, with the authorities planning to bring it down to 3% over the coming years. Increasing tax revenue has been a central part of this progress, with tax collection rising from approximately Dh208.9bn ($21.8bn) in 2015 to Dh242.5bn ($25.3bn) in 2018.

Debt, however, increased significantly over the past decade, most of it triggered by the 2008 global financial crisis, leading debt to expand from 47% of GDP to 64.9% of GDP between 2009 and 2018. However, the country is expected to bring it down to 60% of GDP by 2024, according to the IMF report.

The 2020 budget is focused on reducing expenditure and further enlarging the tax collection. Among other measures, the new budget introduced tax incentives to push Moroccans to declare overseas assets as well as encourage repatriation of capital held abroad back to the kingdom. The budget also increased planned government investment from Dh195bn ($20.3bn) in 2019 to Dh198bn ($20.6bn) in 2020, but reduced subsidies for sugar, cooking oil and cooking gas from Dh18bn ($1.9bn) to Dh13.6bn ($1.4bn). However, some in the business community have also underscored the importance of continuing public support for areas of critical importance to the economy, such as research and development (R&D). “The government needs to implement fiscal incentives to encourage companies to invest in R&D,” Mohamed Khalfaoui, managing director of the National Centre for Scientific and Technical Research, told OBG. “As of early 2020 less than 30% of research was financed through the private sector,” he said.

Development Plans

Long-term policy planning has helped Morocco diversify its economy. Although agriculture still accounts for 15% of GDP and employs roughly 40% of the country’s workers, the Green Morocco Plan, launched in 2010, has attempted to modernise the sector and make it more resilient to weather patterns. Despite progress, agricultural activity in many parts of the country continues to be characterised by low productivity.

Alongside investment in key infrastructure and efforts to make the country more attractive to foreign investors, the authorities launched the Industrial Acceleration Plan 2014-20, which supported economic diversification through emerging industries such as automotive and aeronautics manufacturing. The focus on several new industrial segments enabled industry to grow from 14% of total GDP in 2014 to 25% by 2018 (see Industry & Mining chapter). Over that same period, exports of Morocco’s main industries, including automotive components, agro-industrial goods, phosphates and other mining goods, textiles, aeronautic components and electronic components, rose from Dh200.8bn ($20.9bn) to Dh275.1bn ($28.7bn), according to the Office des Changes.

A New Path

Economic development has brought palpable improvements to the life of average Moroccans. GDP per capita in the kingdom has increased from $1374 in 2000 to an estimated $3345 in 2019, according to the IMF. However, a 2016 study by the High Commission for Planning estimated that there were still 1.6m Moroccans living in poverty and an additional 4.2m citizens in a situation of vulnerability. Current plans for devolution, which are set to add a higher degree of local participation in each region’s development plans, will support the reduction of economic disparities between the kingdom’s regions over the long term (see analysis). Overall, the authorities have been attentive to calls for fiscal reform and greater economic inclusion. Besides managing the internal and external risks, economic policy discussions have revolved around what direction the country’s development strategy for the coming years should take. “Morocco needs growth rates of over 5% to be able to absorb the new human resources joining the labour market and reduce social unrest,” Souhail Chalabi, deputy general manager at BMCE Capital Gestion, a local financial advisory company, told OBG.

Recent events have reflected the social discontent in some quarters of Moroccan society, particularly in terms of creating enough new employment opportunities. The protests over the economic and social conditions in northern Morocco during 2017 and 2018 have added a new sense of urgency to state efforts to make economic growth more inclusive. Furthermore, the lack of sufficient employment opportunities, even for graduates, has pushed many of the country’s educated citizens to emigrate, leading to a drain of skilled and trained human resources.

In a speech in mid-2019, King Mohammed VI announced the creation of a special commission tasked with determining the kingdom’s new growth model. The commission will be made up of 35 experts from different backgrounds and headed by Chakib Benmoussa, who was formerly the minister of interior and the Moroccan ambassador to France. The commission is charged with coming up with recommendations for the reform of Morocco’s economy and society, including changes to investment and taxation laws, education and health.

Increased Competition

Public dissatisfaction was also expressed through the online campaign of April 2018 that encouraged Moroccan consumers to boycott products that were classified as too costly or produced by companies perceived to be excessively profitable. Some private sector players have noted a general slowdown in consumption patterns, which they attribute to Moroccans’ purchasing power experiencing a general decline since 2016.

The boycott movement had specific targets: fuel distributed by Afriquia, part of the Akwa group; milk from Centrale Danone, the Moroccan subsidiary of French food producer Danone; and Sidi Ali water, produced by Eaux Minerales d’Oulmès; among others. The campaign resulted in the erosion of profit margins and a worsening in the performance of the Casablanca Stock Exchange in 2018. The movement was an unexpected blow to many of the kingdom’s major economic players and underlined their vulnerability to swift changes in consumer mood. Although the negative impacts of the boycott movement had dissipated by early 2019, the movement still highlighted the need for increased competition among certain segments of the economy. As a result, a new president was nominated for the Competition Council (Conseille la Concurrence, CC), and the government strengthened the council’s powers in late 2018. By May 2019 the CC was already examining anti-competitive practices in the downstream petroleum segment and was planning to launch a national competition barometer in 2020, which is expected to regularly measure the level of competitiveness across all sectors of the economy. “The boycott movement pushed state institutions to act and have a say in these markets and ensure price freedoms as a way to avoid consumer backlash,” Rachid Aourraz, a senior fellow at the Moroccan Institute for Policy Analysis, told OBG.

Business Environment

As the economy has diversified over the past decade, the business environment has seen significant improvements. In the World Bank’s “Doing Business” report, which measures and assesses the level of competitiveness of economies across the globe, Morocco moved from 128th to 60th out of 190 economies between 2010 and 2019. Additional changes could help to further improve the operating environment, particularly for local businesses. As stated in the IMF’s Article IV consultation report published in July 2019, “weaknesses in the business and competition environment have limited opportunities for small and medium-sized enterprise development and middle-class entrepreneurship”.

Efforts to increase digital access to public services have helped to streamline administrative processes in Customs procedures, registering new businesses, transferring property rights and other areas. There are also measures geared towards improving conditions for small businesses and entrepreneurs (see analysis).

Business conditions and the private sector’s ability to invest are set to see an improvement following renewed government efforts to accelerate the repayment of value-added tax (VAT). The total VAT arrears owed to public and private companies in Morocco amounted to close to 4% of GDP, according to the mid-2019 IMF report. The authorities are aiming to pay around Dh10bn ($1bn) in VAT arrears in 2020.


Although the Moroccan dirham remains pegged to the euro and the US dollar, the government has announced plans to move towards liberalisation of the currency. In practice, however, this will likely take several years. In 2015 BAM reduced the weight of the euro in the peg from 80% to 60%, and raised the weight of the US dollar from 20% to 40%. Then, in 2018, the central bank widened the band of fluctuation in which the Moroccan currency can be traded against hard currencies, expanding it from 0.3% on either side of the previous day’s closing value to 2.5%.

Preparing the economy for full liberalisation will take time and will only come after several economic and political reforms. A free floating dirham would likely lead to its depreciation, which could boost Moroccan exports. However, it would bring a significant level of inflation as well, given the role that imports play in the country’s economy. “Liberalising the dirham is like making a new constitution, as it establishes a new social contract between the government and the population,” Aourraz told OBG. “If the dirham goes down, the state needs to know whether the citizens are ready to support the increased levels of inflation.”


Sound macroeconomic management has allowed the kingdom to maintain relatively stable levels of inflation over the past decade. In 2018 higher food prices led to moderate increases, which saw headline inflation reach 1.9%, compared to 0.7% in 2017, according to IMF data. In December 2019 BAM estimated that inflation for 2019 would fall to 0.3%, sustained by a decrease in the price of commodities. The central bank has forecast inflation will increase to roughly 1.1% and 1.4% in 2020 and 2021, respectively. Medium-term projections see Morocco maintaining an inflation rate of below 2% over the coming years. Stable inflation has allowed the central bank to maintain relatively low interest rates. Following a meeting of its board in mid-December 2019, BAM kept its policy rate at 2.25%, the same level it has stayed at since the first trimester of 2016. Curbing inflation has been a critical component of the country’s stable economic performance, providing a strong foundation for the kingdom as it navigated the turmoil that was caused by both the 2008 global financial crisis and the regional instability following the 2011 popular uprisings in the North African and the Middle Eastern region.

Investment Flows

Morocco’s geographic location, coupled with intensive investment in critical infrastructure such as ports, railways and electricity generation capacity, has facilitated the kingdom’s ability to attract foreign direct investment (FDI).

In 2018 Morocco’s FDI inflows increased by 31.3% to Dh34.2bn ($3.6bn), according to the Office des Changes. Financial services and insurance accounted for 28.3% of total FDI, at Dh9.7bn ($1bn). The second-largest recipient of FDI was the real estate sector, which accounted for 15.7% of the total, with Dh5.4bn ($562.6m), followed by manufacturing, which received 14.3% of investment. Ireland was the single largest investor in Morocco in 2018, accounting for 28.4% of investment, at Dh9.7bn ($1bn). At a distant second, France accounted for 11%, or Dh3.8bn ($395.9m). In terms of regional partners, the UAE was the largest Arab investor, bringing in Dh2.8bn ($291.7m), or 8.2% of all investment in the kingdom that year. The country’s positive economic performance has enabled domestic companies to increase their presence abroad. Notable examples of this have been seen in the banking and financial services sectors, with local players expanding into Africa over the past decade. Although it fell from Dh1.3bn ($135.4m) in 2017, Côte d’Ivoire was the largest recipient of Moroccan investment on the continent, attracting some Dh455m ($47.4m) from the kingdom in 2018.

Foreign Trade

The growing importance of manufacturing activities has allowed Morocco to focus on the development of its export markets. Its close relationship with the EU in particular has been critical for economic development. In 2018 commercial exchanges with European countries were worth a total of Dh501.9bn ($52.3bn), accounting for 66.4% of the kingdom’s total trade. Of this figure, over Dh443.3bn ($46.2bn), or 58.6%, was with EU countries, with Spain and France remaining the two key EU partners, at Dh141.1bn ($14.7bn) and Dh116.9bn ($12.2bn) in trade, respectively. Imports from Spain have been rising steadily, from Dh54.1bn ($5.6bn) in 2014 to over Dh76bn ($7.9bn) in 2018, according to the Office des Changes. The value of Moroccan exports to Spain has also trended upwards, rising from Dh43.9bn ($4.6bn) to Dh65bn ($6.8bn) over the same period. Imports from France expanded from Dh48.8bn ($5.1bn) in 2014 to Dh57.1bn ($5.9bn) in 2018, while exports to the country increased from Dh41.4bn ($4.3bn) to Dh59.7bn ($6.2bn) over the same period.

Trade has been facilitated by a strengthening of commercial agreements with a range of regions around the globe. Trade with Asian countries expanded from Dh105.6bn ($11bn) in 2017 to Dh122.4bn ($12.8bn) in 2018, due to a large extent to an increase in trade with China and India. Morocco is also part of the European Free Trade Association, which includes Lichtenstein, Norway, Switzerland and Iceland. Regionally, Morocco set up preferential trade agreements with Tunisia, Egypt and Jordan through the signing of the Agadir Initiative of 2004. Additionally, Morocco has established free trade deals with Turkey, the US and Canada. Since 2017 Morocco has also been engaged in technical negotiations with Mercosur regarding a free trade agreement with the bloc that would give the kingdom better trade conditions with Argentina, Brazil, Paraguay and Uruguay.

Largely because of its dependence on energy imports, Morocco has run a structural trade deficit. In 2018 the country’s trade with the rest of the world expanded by 10.1% to reach Dh756.2bn ($78.8bn). Exports rose by 10.6% to Dh275.2bn ($28.7bn) and imports increased by 9.8% to some Dh481bn ($50.1bn). As such, Morocco’s 2018 trade deficit settled at approximately Dh205.9bn ($21.5bn).

Education & Employment

Besides its persistent trade deficit, Morocco has also had to deal with steady unemployment levels. The persisting challenge of creating job opportunities sufficiently quickly has highlighted some of the limitations of the kingdom’s economic strategy over the past decades. Despite building critical transport and logistics infrastructure and promoting the development of new industrial export segments, the country’s notable economic growth has not been sufficiently inclusive. As such, unemployment remains problematic, with national rates varying between 8.5% and 10.6% over the 2008-18 period, according to government figures. The issue disproportionally affects young Moroccans, with youth unemployment at 27.4% in 2018, a slight decrease from 28.2% in 2017.

The government is currently enacting the Plan for the Promotion of Employment 2017-21, which is aimed at creating roughly 1.2m new jobs across different economic sectors. The plan seeks to address the high levels of youth and female unemployment as well as the need to create more job positions across all of the kingdom’s regions. The strategy also focuses on public financial support for new job creation, closer links between the training and education sectors, and improved oversight of the labour market.

Sector players have underscored the importance of public support for investors in light of the country’s continued high unemployment. “In no case should the lack of human resources hinder the creation of wealth by investors, hence the importance of having a universal and adapted public service that supports them in this strategic aspect,” Abdelmounime El Madani, managing director of the National Agency for the Promotion of Employment and Skills, told OBG.

Better aligning the job market’s needs with the education system will be a necessary next step in ensuring youth are equipped with the skills to secure employment. Although access to schooling and higher education has improved over the years, training in line with the needs of the economy has lagged behind. “In order to develop an economy, you need both good human capital resources as well as good institutions. Effective industrialisation arrives afterwards,” Aourraz told OBG. “However, if we begin by creating mega-projects like ports and railways, and forget that we have a lot of difficulties to overcome in the reform of education, our end goal will not be accomplished.”


The economy is poised to continue along its trajectory of economic growth, but GDP expansion rates will depend on the policy choices made by the government. Although estimates by the IMF project that annual growth rates will reach 4.5% in 2024, there is still the matter of ensuring that GDP growth translates into improved living and working conditions.

There are several factors that could help to accelerate socio-economic development. Maintaining a focus on development of the industrial base could further raise the country’s export volumes and reduce the dependence on the agriculture sector. Additionally, easing red tape and bureaucracy is likely to make the business environment more attractive for both international and domestic investors.

The increased economic integration between Maghreb countries could also help to facilitate the growth of export opportunities for local businesses. In the meantime, curbing unemployment levels through better skills training and education will be critical for Morocco to become a more inclusive economy.