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S&P Global Ratings has upgraded its outlook on Morocco’s economy from stable to positive. The company cites the country’s resilience in the face of recent challenges and its dedication to ongoing economic and fiscal reforms. This move reflects confidence in Morocco’s ability to achieve sustainable growth in the coming years.
The positive outlook reflects the expectations that Morocco will build on its recent track record of implementing socio-economic and budgetary reforms, paving the way for stronger and more inclusive growth and a reduction in budget deficits.
Morocco’s economy has proven surprisingly robust. Despite navigating the global COVID-19 pandemic, rising energy prices, and even severe droughts, the country has maintained access to both domestic and international financing.
The reforms will take time to fully bear fruit, while water scarcity will likely continue to constrain growth in coming years. Despite ongoing diversification, economic growth in Morocco still relies significantly on rain-fed agriculture (10% of GDP but almost 30% of employment), making it sensitive to rainfall patterns. This resilience is a testament to the ongoing diversification efforts, with sectors like tourism, automotive production, and phosphates exports experiencing significant growth, lessening reliance on traditional sectors like agriculture.
The positive outlook also hinges on the Moroccan government’s commitment to a series of socioeconomic and budgetary reforms. These reforms aim to formalize the economy, making it more inclusive and competitive. Expanding social safety nets and increasing digitalization are expected to play key roles in achieving this goal, ultimately leading to a broader government tax base.
Another positive sign is the government’s dedication to fiscal consolidation. Budget deficits have narrowed more than expected in recent years, demonstrating a commitment to responsible spending. This approach will stabilize public finances and create space for future investments in critical areas like infrastructure and social programs. S&P Global Ratings forecasts Morocco’s annual economic growth to accelerate to an average of 3.6% between 2024 and 2027.
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However, some challenges remain. Water scarcity continues to be a long-term concern, particularly for the drought-sensitive agricultural sector. The government is addressing this by improving water management and irrigation efficiency. High unemployment, especially among youth, requires continued focus on creating jobs and fostering entrepreneurship.
