Marrakech – Morocco’s economy has outperformed its income peers since 2022. But a new study warns the current expansion may not last without deep structural reforms.
Published Wednesday in Le Grand Continent, a Paris-based independent European review founded in 2019 and edited by the Groupe d’études géopolitiques at the École normale supérieure, the study examines whether Morocco’s recent growth marks a durable shift or a temporary boom. Five researchers – Abdelaaziz Ait Ali, Mahmoud Arbouch, Fahd Azaroual, Karim El Aynaoui, and Adnane Lahzaoui – authored the analysis.
The numbers clearly indicate that non-agricultural GDP growth has averaged 4.4% since 2022 and 4.8% from 2024. That exceeds the pre-pandemic average by 1.3 percentage points and approaches the 4.9% non-agricultural expansion the country recorded during its peak growth phase between 2000 and 2008.
Per capita GDP rose by 2.7% annually between 2022 and 2025, outpacing comparable middle-income economies by 0.8 points. The study frames this in a global context where “the trend toward convergence appears to have reversed,” with high-income economies widening the gap.
Public investment has driven the recovery. Gross fixed capital formation contributed an average of two percentage points to annual growth between 2022 and 2026 – roughly half the total. The investment rate is projected to reach 30% of GDP by 2025-2026.
State-owned enterprises, known in Morocco as Établissements et Entreprises Publics and including entities such as Royal Air Maroc, ONCF, and the national motorway company (ADM), have absorbed a growing share of capital spending since 2024. Public investment in the broader fiscal sense is projected to stabilize around 19% of GDP.
Household consumption provided the second engine, contributing about 1.7 points annually after the 2021-2022 inflation shock, when consumer prices rose 6.3% on average. As price pressures eased from 2023, domestic demand recovered.
But this investment-heavy expansion carries a cost. Net exports dragged on growth by an average of 1.7 points per year, even as export sectors performed well. The current account deficit reached roughly 3.5% of GDP in 2024. Equipment imports and construction materials, tied directly to public projects, fueled the gap.
The study notes this “raises questions about the effectiveness of the fiscal multiplier of public spending, in a context of significant leakages abroad.” The authors’ econometric estimation puts the short-term fiscal multiplier at 0.3 for total public spending and 0.7 for public investment alone.
External factors have reinforced Morocco’s position as an industrial platform
The reshuffling of global supply chains has worked in Morocco’s favor. Net FDI flows rose from 0.7% of GDP in 2023 to 1.8% in 2025. Chinese capital has been central. The Gotion Gigafactory in Kénitra, for electric battery production, could reach $6.5 billion in total investment. CNGR Advanced Material’s battery materials plant at Jorf Lasfar represents another $2 billion. Chinese investment now spans batteries, electrical components, electric mobility, and green hydrogen.
The sectoral composition of FDI has transformed. Manufacturing accounted for 44.7% of net inflows in 2024, up from 21.4% in 2020. The automotive sector’s share nearly doubled to 13.7%. Electrical equipment surged from 0.6% to 13.3%.
Diaspora remittances have also provided support. Roughly 75% of transfers go to consumption, 15% to savings, and only 10% to investment, mostly in real estate. Improving terms of trade from 2023 eased the import bill and moderated imported inflation.
Tourism has emerged as a key growth contributor. Morocco received nearly 20 million tourists in 2025. The sector’s share of GDP climbed to 7.3% in 2024 from 6.8% in 2019, outperforming regional averages in the Middle East and North Africa. Tourism employment grew at 4.6% annually between 2000 and 2023, the fastest rate among tradable sectors.
Information and communications technology services also stand out. Programming and IT consulting contributed 2.4% to gross export value added over 2010-2020, exceeding the OECD average by 1.6 percentage points.
The study’s central question is whether this pace can hold
The authors identify three structural constraints. First, rising debt limits how long the state can sustain current investment levels. More than half of public enterprise financing comes from bank borrowing, supplemented by domestic bond issuance.
Second, the efficiency of investment has deteriorated. The incremental capital-output ratio rose from 6.0 during 2000-2007 to 11.5 during 2008-2019, before settling at 8.8 between 2022 and 2025. Third, the domestic private sector remains weak, facing limited credit access, unfair competition from the informal sector, and fiscal distortions.
The study presents original econometric findings on financial crowding out. A public financing shock reduces private credit growth by 1.24 percentage points after four quarters and by 2.31 points after twelve quarters. Banks reallocate portfolios toward public debt instruments at the expense of private lending.
Total factor productivity has been a drag, not a driver. Its average contribution to growth between 2001 and 2023 was negative 0.3%, compared to a positive 0.2% average for emerging and developing economies. The study calls the growth model “extensive, based on the increase of production factors, rather than intensive, meaning driven by gains in total factor productivity.”
Structural transformation remains incomplete. Non-tradable sectors expanded from 63.9% to 67.1% of total value added between 2000 and 2023. Labor released from agriculture has largely moved into low-productivity services – retail, repair, miscellaneous activities – rather than manufacturing. Agriculture itself has stagnated since 2014, averaging just 1.1% growth amid recurring droughts and depleting water tables.
Middle East tensions now add a new dimension of external risk
Energy prices have risen 50% to 60% since late February. The government opened MAD 20 billion, approximately €1.87 billion, in supplementary credits – roughly 1% of GDP in additional fiscal pressure for 2026. Sovereign CDS spreads initially spiked before stabilizing, but domestic Treasury bond yields remain above pre-conflict levels, particularly on longer maturities.
The study draws a comparison with Mexico, Poland, and Vietnam – economies that have similarly leveraged their positioning in a fragmenting global order. Morocco’s role as a “connector state” between Europe, Africa, and China opens opportunities, the authors argue, but connectivity alone does not constitute a growth strategy.
Labor market rigidities, education quality gaps, weak innovation ecosystems, and constraints on private sector development must all be addressed. “External connectivity and internal reforms are complementary,” the study concludes. “The first opens opportunities; the second converts them into durable growth.”
