A recent Policy Paper from the Policy Center for the New South offers a detailed analysis of Morocco’s economic resilience since the pandemic. While the Kingdom effectively capitalizes on the reorganization of global value chains and an unprecedented surge in public investment, the authors caution against inherent vulnerabilities in a growth model still heavily reliant on state intervention and insufficiently supported by the private sector.
As numerous emerging economies continue to struggle in regaining their pre-pandemic growth momentum, Morocco stands out as a notable exception. Since 2022, the growth in non-agricultural activities has averaged 4.4%, approximately 1.3 percentage points higher than its historical average. This robust performance has allowed the country to progressively offset the losses incurred during the health crisis.
This is a key finding from a Policy Paper published earlier this July by the Policy Center for the New South, authored by Abdelaziz Ait Ali, Mahmoud Arbouch, Fahd Azaroual, Karim El Aynaoui, and Adnane Lahzaoui. Beyond its current economic assessment, the study delves into a fundamental question: is Morocco embarking on a sustained new economic trajectory, or is it merely benefiting from an unusually favorable international environment?
Robust growth driven by substantial public investment
The initial insight from the report highlights that Morocco’s economic recovery is primarily underpinned by investment.
With an investment rate approaching 30% of its GDP, the Kingdom ranks among the top investing economies in its category. The authors primarily attribute this dynamic to significant investments from the state, public establishments, and state-owned enterprises, channeled into major projects spanning infrastructure, transport, energy, and preparations for the 2030 World Cup.
While this policy has accelerated economic revival, it also exposes a structural limitation. A substantial portion of the necessary equipment is imported, meaning that some of the benefits from these investments accrue more to foreign suppliers than to the national productive fabric. This results in a persistent trade deficit, which continues to restrain overall growth despite strong performances from export-oriented sectors.
Tourism and services drive economic momentum
One of the study’s most striking observations pertains to the very structure of Morocco’s economic growth.
Contrary to widely held belief, it is not solely the automotive or manufacturing industries that are currently propelling the Moroccan economy.
The tertiary sector has emerged as the primary engine of recovery. Tourism, now nearing 20 million visitors, alongside transport, logistics, financial services, and engineering activities, collectively account for the lion’s share of value creation.
The construction sector is also experiencing renewed vigor, buoyed by extensive infrastructure projects, while agriculture remains the main source of economic volatility, frequently impacted by drought conditions.
Morocco capitalizes on new global economic landscape
According to the authors, the Kingdom is currently reaping the rewards of a profound transformation in the global economy.
Geopolitical tensions between China and the United States, supply chain disruptions since the Covid-19 pandemic, and evolving industrial diversification strategies are compelling major international groups to seek production platforms closer to European and African markets.
In this evolving landscape, Morocco is significantly enhancing its attractiveness.
The study highlights Chinese investments in the electric battery sector, citing projects like Gotion High-Tech in Kénitra and CNGR in Jorf Lasfar, as prime examples of this new industrial dynamism.
More broadly, the authors contend that the Kingdom is progressively establishing itself as a “connector state,” adept at linking value chains between Europe, Africa, and Asia, thanks to its political stability, robust logistical infrastructure, and extensive trade agreements.
Economic credibility strengthens investor confidence
The report also underscores that Morocco’s appeal is built upon solid macroeconomic fundamentals.
Financial stability, the gradual improvement of public finances, comfortable foreign exchange reserves, and a reduction in sovereign risk collectively bolster the confidence of foreign investors.
Furthermore, remittances from Moroccans residing abroad continue to support domestic consumption, while an improvement in the terms of trade has helped mitigate the inflationary impacts of external shocks.
The true challenge begins now
However, the study adopts a considerably more cautious tone when addressing medium-term prospects.
According to its authors, the current growth model cannot sustainably rely on ever-increasing public investment.
They identify three significant limitations: mounting public debt, a gradual decline in investment returns, and the persistent difficulties faced by the private sector in assuming a leading role.
The document specifically demonstrates that more capital is now required to generate the same point of growth compared to the early 2000s, signaling a decreasing efficiency of investment.
For the researchers, the primary weak link remains the private sector’s capacity to invest, innovate, and enhance productivity.
Access to financing remains challenging for many Small and Medium-sized Enterprises (SMEs), competition from the informal sector continues to depress their competitiveness, and public investments absorb a growing share of available banking resources, thereby limiting credit directed towards businesses.
This situation impedes the robust emergence of growth driven more by innovation, productivity gains, and private investment.
A fresh perspective on economic transformation
Finally, the report puts forth an idea that warrants careful consideration: For a long time, the development of emerging countries was primarily predicated on industrialization.
The authors suggest that today, certain exportable services—including tourism, information technology, digital services, and consulting activities—can also become engines of economic transformation, provided they are strongly integrated into international value chains and create skilled employment opportunities.
Morocco at a pivotal moment
Ultimately, this Policy Paper delivers a nuanced message. Indeed, Morocco currently benefits from a favorable international climate, characterized by geopolitical fragmentation and the reorganization of global production chains. And yes, its stability, infrastructure, and strategic positioning between Europe and Africa enhance its attractiveness.
However, these advantages alone do not constitute a comprehensive development strategy.
For the authors, the true challenge now lies in transforming this window of opportunity into sustainable growth through profound reforms in the labor market, the education system, innovation, and the overall business environment.
In essence, Morocco possesses an unprecedented strategic advantage today. The question is no longer simply whether it can attract more investments, but rather whether it can effectively convert its status as a “connector” in the global economy into a genuine lever for lasting prosperity.