Morocco: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
In recent years, the Moroccan economy has been characterised by macroeconomic stability and low levels of inflation, relying mostly on exports, a boom in private investment, and tourism. However, the COVID-19 shock has pushed the Moroccan economy into its first recession since 1995. The country’s GDP rebounded in 2021 when it grew an estimated 7.9%, but was hindered by global shocks and a severe drought in 2022, with GDP growing by only 0.8% (IMF). The recovery of tourism, strong remittances, and resilient exports have partially offset the shocks derived from Russia’s invasion of Ukraine, which fueled inflation and reduced households’ purchasing power. The IMF expects Morocco’s growth rate to hover around 3% this year and the next, assuming a gradual improvement of external conditions and an average agricultural season.
The fiscal impact of the health and social protection reform and postponement of the liquefied petroleum gas and flour subsidy reform slowed the consolidation of the budget deficit, which was estimated at 5.1% of GDP in 2022. The government published its three-year budget plans as part of the 2023 Budget, which envisages a continued reduction of the deficit to closer to pre-pandemic levels (projected at 5.2% of GDP this year and 4.5% in 2024 – IMF). The debt-to-GDP ratio has been increasing in recent years, reaching 70.3% in 2022 (from 68.9% one year earlier), and is expected to remain stable over the forecast horizon. The average annual inflation rate reached 6.2% in 2022 as a result of the 11% increase in the food index and the 3.9% increase in the non-food index (data HCP). Higher energy prices contributed to inflationary pressures (the country’s energy bill has more than doubled in the first eleven months of the year), and the Central Bank raised its benchmark interest rate to 2.5% in December in an effort to curb inflation.
Albeit its high levels, the unemployment rate has been declining in recent years and averaged 11.1% in 2022. For 2023 and 2024, the IMF expects it to further decrease to 10.7% and 10.2%, respectively. According to the Moroccan Higher Planning Commission, unemployment particularly affects the youth (15-24 years of age – at 31.8% as of August 2022 – latest data available) and recent graduates. The rate of poverty remains one of the highest in the Mediterranean region, with almost one-fifth of the population living near the poverty line. Finally, the GDP per capita (PPP) was estimated at USD 9,808 in 2022 by the IMF.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 121.35 | 142.87 | 138.05 | 138.78 | 147.08 |
| GDP (Constant Prices, Annual % Change) | -7.2 | 7.9 | 1.1 | 3.0 | 3.1 |
| GDP per Capita (USD) | 3,375 | 3,934 | 3,765 | 3,749 | 3,936 |
| General Government Balance (in % of GDP) | -5.5 | -5.9 | -5.0 | -4.9 | -4.4 |
| General Government Gross Debt (in % of GDP) | 72.2 | 68.9 | 68.8 | 68.3 | 68.4 |
| Inflation Rate (%) | 0.6 | 1.4 | 6.6 | 4.6 | 2.8 |
| Unemployment Rate (% of the Labour Force) | 12.2 | 11.9 | 12.9 | 11.0 | 10.5 |
| Current Account (billions USD) | -1.42 | -3.24 | -5.96 | -5.18 | -5.08 |
| Current Account (in % of GDP) | -1.2 | -2.3 | -4.3 | -3.7 | -3.5 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Given the richness of Morocco's soil, the economy is dominated by the agricultural sector, which employs one-third of the workforce and contributes 12% of GDP (World Bank, latest data available). Barley, wheat, citrus fruits, grapes, vegetables, argan, olives, livestock and wine are the country's main crops. In recent years, the government has focused on the sector through its "Green Morocco Plan" and the Agricultural Development Fund. The country’s cereal production is highly variable, with local dams providing irrigation for only 15% of the agricultural land and rainfed agricultural production accounting for 85% of the aggregate output (FAO). According to preliminary data by the Ministry for Agriculture, the agricultural sector’s value-added decreased by 14% year-on-year during the 2021/22 crop year. The production of the main cereals (common wheat, durum wheat and barley) for the 2021/2022 crop year was estimated at 32 million quintals, down 69% from the previous year's record production, also due to the drought experienced by the country: at the end of April 2022, a rainfall level of 188mm was recorded, which is 42% lower than the average for the last 30 years (327 mm) and 35% lower than the previous year (289 mm).
Industry contributes 26.1% of the GDP and employs 23% of the workforce. The main sectors are textiles, leather goods, food processing, oil refining, and electronic assembly. However, new sectors have been booming: chemistry, automotive parts, computers, electronics and the aerospace industry. The automotive industry, in particular, has been growing in the last decade, with double-digit annual growth in terms of job creation and exports (becoming the country’s main exporting sector and Africa’s main automotive hub). Overall, the manufacturing sector is estimated to account for 15% of GDP. The emergence of new industries should allow the country to reduce its dependence on the agricultural sector. Morocco’s industrial sector is the largest beneficiary of foreign direct investment. The country has around 75% of the world's estimated reserves of phosphates, and the mineral sector accounts for almost 30% of exports (Oxford Business Group). Mining accounts for 10% of GDP, of which 90% derives from phosphates.
The services sector accounts for slightly above half of GDP (51.6%) and gives employment to 44% of the workforce. It is spearheaded by real estate and tourism, which has been very dynamic in recent years (accounting for around 11% of GDP and hitting a record of nearly 13 million arrivals in 2019). Although tertiary activities recorded a downward trend following the outbreak of the COVID-19 pandemic, with a particularly weak tourism performance, improvements were achieved in 2022 when tourist arrivals reached 84% of the pre-pandemic level and the value tourist receipts in foreign currency stood at MAD 81.7 billion at the end of November 2022 (data Ministry of Tourism). Finally, the Moroccan banking sector is dominated by locally owned banks, which account for more than 80% of industry assets (U.S. Department of Commerce).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 33.3 | 23.1 | 43.7 |
| Value Added (in % of GDP) | 12.0 | 26.1 | 51.6 |
| Value Added (Annual % Change) | 17.6 | 6.8 | 6.4 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest update: September 2023
