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Economy

Morocco’s Economic Outlook: Rebound on the Horizon for 2025

Friday 19 July 2024 - 08:30

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Morocco's economy is set for a significant rebound in 2025, according to two recent reports from the Moroccan High Commission for Planning (HCP) and the World Bank. These projections anticipate considerable growth driven by a recovery in the agricultural sector and sustained strength in non-agricultural sectors.

Economic Growth Projections

The HCP's latest budget report forecasts a GDP growth of 3.7% in 2025, up from a projected 3% in 2024. This anticipated rebound is largely attributed to the agricultural sector, which is expected to see an 8.5% increase in value added after a 4.6% contraction in 2024. The World Bank's Morocco Economic Monitor similarly projects GDP growth of 4% for 2025, contingent on a return to normal cereal production levels.

Sectoral Performance

Both the HCP and the World Bank highlight the continued robust performance of non-agricultural sectors. The HCP anticipates a 3.2% growth in non-agricultural GDP, while the World Bank is slightly more optimistic, predicting a 3.6% increase.

Domestic Demand and Fiscal Outlook

Domestic demand is expected to improve as well. The HCP projects a 2.6% rise in private consumption for 2025, with the World Bank forecasting a more substantial 4.2% increase. On the fiscal front, both reports foresee a gradual reduction in the budget deficit, anticipating a deficit of 3.8% of GDP by 2025.

Challenges and Risks

Despite these positive projections, both reports acknowledge significant challenges. The World Bank highlights continued stress in Morocco's labor market, particularly in rural areas, and potential fiscal risks linked to innovative financing operations and health insurance system reforms.

Both institutions stress the importance of addressing constraints in the private sector to boost productivity and job creation. The World Bank notes, "Overcoming the bottlenecks that explain the productivity dynamics of the formal private sector is critical to accelerate economic growth and job creation in Morocco."

While the outlook for 2025 appears promising, with expected growth in both agricultural and non-agricultural sectors, the HCP and World Bank emphasize the need for continued reforms and vigilance. Addressing economic challenges and maintaining reform momentum will be crucial for sustaining and enhancing Morocco's growth prospects.