Strong Economic Growth and Future Projections
On March 20, the Executive Board of the International Monetary Fund (IMF) finalized its 2026 Article IV consultation with Morocco, alongside the Mid-Term Review under the Flexible Credit Line Arrangement (FCL), which was initially approved on April 2, 2025. The Moroccan authorities have agreed to make the Staff Report from this consultation publicly available, highlighting their commitment to transparency and accountability.
In 2025, Morocco experienced a noteworthy acceleration in real GDP growth, reaching an estimated 4.9 percent. This growth was largely driven by a resurgence in agricultural output and an increase in large-scale infrastructure projects. Despite these positive trends, high unemployment levels present ongoing challenges for the nation. Inflation remained low at 0.8 percent, allowing Bank Al-Maghrib to maintain a neutral policy stance following previous rate cuts. The current account deficit expanded to 2.1 percent of GDP, attributed to rising imports linked to investment, although this was partially balanced by strong tourism performance. Moreover, robust revenue collection resulted in a smaller-than-expected overall fiscal deficit of 3.5 percent of GDP, despite higher spending on public investments and state-owned enterprises.
Future Risks and Economic Policies
Looking forward, the growth outlook for Morocco appears promising, with real GDP growth forecasted at 4.4 percent for 2026, 4.5 percent for 2027, and around 4 percent over the medium term. These projections are contingent on normalized agricultural production and continued infrastructure investment, particularly with enhanced private sector engagement. However, the near-term growth outlook is tempered by the ongoing conflict in the Middle East, which disrupts global commodity markets and dampens global demand amid rising uncertainty. Inflation is expected to experience a temporary increase due to higher energy prices before stabilizing at approximately 2 percent in the medium term. Given the significant import content associated with infrastructure investments, a moderate widening of the current account deficit is anticipated. Nevertheless, international reserves are expected to remain adequate, and fiscal deficits for 2026 and the medium term are aligned with a gradual reduction in debt-to-GDP to 60.5 percent by 2031.
Risks to this optimistic outlook remain, particularly from external factors such as commodity price volatility and trade barriers that could impact economic activity in the Euro Area. Domestically, potential challenges include weaker-than-expected outcomes from public infrastructure investments, which could hinder growth and employment opportunities. In the event that these downside risks materialize, the existing policy space and FCL are expected to facilitate a smooth economic adjustment.
Directors of the IMF expressed agreement with the staff appraisal, emphasizing Morocco's strong economic fundamentals and robust policy frameworks as crucial to the country's economic resilience and market confidence. In light of increasing external uncertainties, including geopolitical tensions, the Directors acknowledged Morocco's substantial buffers to address potential shocks. The Flexible Credit Line arrangement continues to serve as a vital precautionary measure. It is imperative that Morocco maintains sound macroeconomic policies and progresses with structural reforms to foster economic growth and job creation.
For further details, please refer to the original report As reported by smestreet.in.
