Morocco’s Economic Growth Slows to 3.7% in Late 2024

Morocco's economy recorded a growth rate of 3.7% in the final quarter of 2024, a decline from the 4.2% achieved in the same period last year. This slowdown, reported by the High Commission for Planning (HCP), is attributed primarily to a downturn in agricultural output, while non-agricultural sectors displayed only modest improvements. The economy remains heavily dependent on domestic demand, yet faces significant challenges stemming from increasing financing needs and an expanding trade deficit.

Mixed performance across sectors

Agricultural activity contracted by 4.9%, a stark reversal from last year’s 1% growth. Conversely, the fishing sector experienced a slight recovery, growing by 0.8% after a dramatic 19.2% decline in late 2023.

The secondary sector also saw a slowdown, expanding by 4.9% compared to 6.9% in the same quarter of 2023. This deceleration was primarily driven by extraction industries, which grew by 6.5%, a significant drop from the 16.1% growth recorded previously. Manufacturing experienced a similar trend, with growth at 3.7%, down from 7.4%. However, construction and public works surged to 7%, up from 2.9%, while utilities, including electricity, gas, water, and waste management, increased to 5.7%, compared to 3.6%.

Shifts in demand and investment

In the services sector, growth reached 4.2%, surpassing last year's 3.3%. Tourism and hospitality saw a robust increase of 12.8%, up from 8.2% in late 2023. Public administration and social security services grew by 3.9%, an improvement from 1%. Trade and vehicle repairs rose by 3.1%, compared to 1.8%, while education and health services expanded by 2.7%, up from 1.5%.

Nonetheless, certain service industries exhibited weaker performance. Business services, including research and development, grew by 5.3%, a decline from 5.9%. Transport and warehousing slowed to 4.6% from 5.3%, while finance and insurance services increased by 4.3%, down from 5.5%. Telecommunications witnessed a drop to 2%, compared to 4.3%, and real estate services fell to 1.9%, from 3.3%.

Domestic demand increased by 7.6%, slightly lower than last year's 8.1%, contributing 8.9 percentage points to overall growth, down from 9.4. Household consumption rose by 4.1%, a decrease from 5.1% previously, contributing 2.6 points to growth instead of 3.2. Public expenditure on goods and services improved to 4.8%, up from 3%, contributing 0.9 points compared to 0.6.

Investment, including fixed capital, stock variations, and net acquisitions of valuables, increased by 15.3%, down from 16.6% a year earlier, contributing 5.4 points to growth, slightly lower than the previous 5.5.

Trade deficit widens

Both exports and imports saw substantial increases. Imports rose by 15.6%, compared to 12.5% the previous year, resulting in a negative contribution of 9 points, worse than the 7.7 points recorded last year. Exports increased by 9.2%, up from 5.5%, contributing 3.8 points instead of 2.5. The trade balance continued to exert pressure on economic growth, with external trade's net contribution remaining at -5.2 percentage points, unchanged from the prior year.

Inflation and rising financing needs

Gross Domestic Product (GDP) at current prices grew by 6.2% in the fourth quarter of 2024, down from 8.4% in late 2023. The general price level rose by 2.5%, a decrease from 4.2%, indicating a slowdown in inflation.

Despite this, Morocco's financing needs have escalated. With GDP increasing by 6.2% and net income from abroad rising by just 0.9%, total national income grew at a slower pace of 5.8%, down from 8.7% the previous year. Final consumption spending increased by 4.9%, lower than the 5.7% recorded before, while national savings accounted for 28.8% of GDP, up from 28.2%. Total investment represented 32% of GDP, an increase from 29.6%, thereby widening the financing gap. Morocco's economy now requires external funding equivalent to 3.2% of its GDP, compared to just 1.4% a year earlier.

While Morocco's economy continues to grow, it faces numerous challenges. The slowdown in key sectors, increasing financing needs, and a widening trade deficit underscore the hurdles that lie ahead. Although inflation is showing signs of control, external imbalances pose a potential threat to future economic stability.