Anticipated Economic Growth and Challenges for Morocco
The African Development Bank has projected a slowdown in Morocco's economic growth to 4.2% in 2026, a decline from 4.7% in 2025. This anticipated downturn is attributed to escalating geopolitical tensions and increasing energy costs. Household consumption and infrastructure investment are expected to remain the primary drivers of this growth, particularly within the agriculture, industry, construction, and tourism sectors, which are identified as the main engines of economic advancement.
This economic deceleration is a direct consequence of global geopolitical tensions, notably the ongoing conflict in the Middle East and disruptions in the Strait of Hormuz. Contributing factors include the rising costs of fertilizers and energy, as well as increased import prices. The report highlights that the depreciation of the Moroccan dirham is likely to exacerbate energy costs, further straining the financial situation.
Morocco is not alone in facing these challenges; neighboring Egypt, another significant oil importer in North Africa, is expected to see its growth slow from 4.4% in 2025 to 4% in 2026 before rebounding to 4.3% in 2027. In terms of inflation, Morocco is projected to maintain a manageable rate, with expectations of 2.4% in 2026 and 2.3% in 2027, which is relatively low compared to several major African economies that continue to grapple with double-digit inflation rates, such as Nigeria (16.2% in 2026), Angola (17.7%), and Egypt (14.7%). Through prudent monetary policy and targeted support mechanisms, Morocco appears better positioned to mitigate the impacts of soaring global oil and gas prices.
Fiscal Management and Financial Sector Developments
On the fiscal front, Morocco is undergoing a process of financial consolidation. The budget deficit, which is estimated at around 3.5% of GDP in 2025, is expected to rise to 3.7% in 2026 due to increased wage costs and spending aimed at curbing inflation, before decreasing to 3.2% in 2027 as a result of higher tax revenues. Conversely, the current account deficit is projected to widen significantly, increasing from 2% of GDP in 2025 to 3.5% in 2026 and 3.4% in 2027, attributed to rising import goods and escalating energy import costs, as noted in the report.
Regarding debt management, the report categorizes Morocco alongside South Africa, Mauritius, and Egypt as countries that have implemented transparent practices in managing domestic debt. Experts from the African Development Bank suggest that these experiences could serve as valuable benchmarks for nations still lacking such practices. This transparency contributes to improved accountability, enhances debt sustainability analysis, and fosters investor confidence.
In the financial sector, the report cites the example of Tamwilcom, a Moroccan guarantee company, as a model for national development banks. Its risk-sharing model, which covers between 50% and 80% of the value of loans provided to individuals, successfully mobilized $4.75 billion in 2024, demonstrating the potential for expanding credit access for small and medium-sized enterprises without increasing potential government liabilities.
Moreover, while the African Development Bank economists acknowledge the progress made by Morocco, they point out several challenges, including the need to mobilize extensive financing for the country's development in an increasingly fragmented world. The report further mentions that Morocco has a relatively advanced financial system, with a market capitalization reaching 47.1% of GDP in 2024, making access to international financial markets relatively straightforward. However, this system remains constrained by several structural weaknesses, including the dominance of the banking sector, ongoing hesitance to develop equity financing, a bond market primarily focused on sovereign debt, and a limited base with only 77 listed companies.
As reported by espanaenarabe.com.
