Moroccan Economy at the Start of 2025: Noticeable Recovery and Potential Challenges Ahead
The Moroccan economy received a significant boost at the beginning of 2025, with the value added outside the agricultural sector rising by 4.2% following a growth of 3.6% in the last quarter of 2024. This growth occurred against a backdrop of stable domestic demand, alongside a decline in the negative impact of net external transactions to -1.1 points, attributed to a slowdown in import rates while exports remained weak.
Vital economic sectors recorded exceptional performance, with the value added in commercial services, particularly in hospitality, growing by 13.2%, followed by extractive industries at 6.7%, and construction activities at 6.4%. Conversely, manufacturing activity experienced a slight slowdown due to its significant reliance on foreign trade, which reduced its contribution to growth by 0.2 points.
In this dynamic environment, and with agricultural activity recovering by 3.1%, the Gross Domestic Product (GDP) recorded a general increase of 4.2% year-on-year during the first quarter of 2025.
Household consumption remained a fundamental driver of this growth, supported by improved household incomes from social and tax measures, such as wage increases in both the public and private sectors and reductions in income tax, leading to a 4.5% increase in consumption expenditures despite rising inflation rates.
Inflation reached 2.2% during the first quarter, up from 0.7% in the previous quarter, due to a 3.7% rise in food prices, particularly in meat (+1 point), fresh fish (+0.2 points), and fresh vegetables (+0.1 points after previously contributing negatively). Some tax adjustments, such as the increase in tobacco prices (+2.9% in January), also reinforced this trend.
Non-food prices rose moderately by 1.1%, driven by a 1% increase in energy prices after previous declines. Meanwhile, the pace of core inflation (excluding energy and subsidized goods) slowed to 2.3% from 2.5% in the last quarter.
The money supply continued to grow by 6.5%, bolstered by improved banking liquidity and a decreased need for bank financing, particularly after the decline in cash circulation following the tax amnesty at the end of 2024. Loans directed to the economy saw a slight slowdown, growing by 6.5%.
Bank Al-Maghrib maintained its accommodative stance, reducing the main interest rate to 2.25% in March 2025. This policy resulted in a decline in interbank market interest rates, as well as in the interest rates on loans and treasury bonds.
In the foreign exchange market, the dirham showed significant improvement, rising by 4.2% against the euro and 1.1% against the dollar, reflecting increased confidence in the national currency.
The Casablanca Stock Exchange started the year on a remarkable note, benefiting from the easy monetary policy and increased investor confidence. The “MAZ” index rose by 36.5% year-on-year, while the market capitalization of listed companies increased by 37.8%. The transaction volume more than doubled, with notable performance in sectors such as transportation, mining, real estate, and healthcare.
The national economy is expected to maintain a growth rate of 3.8% in the second quarter of 2025, supported by the recovery of the agricultural sector and the resilience of the services sector. Meanwhile, manufacturing industries will continue their activity despite a decline in external demand, bolstered by the performance of food and mineral industries. The construction sector will also continue to grow, driven by strong demand for public works.
Overall, the growth momentum is primarily supported by domestic demand, which is expected to see a consumption growth of 4.2% and investment growth of 5.1%, underpinned by expansionary fiscal and monetary policies.
However, the growth outlook remains fraught with risks, particularly due to the uncertainty surrounding U.S. trade policies. Despite a 90-day postponement of tariff increases, global markets have begun to experience volatility, particularly in energy and raw material prices, which could impact global industrial activity, especially in Europe.
While the effects of these developments are still uncertain in the current estimates, the possibility of an economic shock in the short term remains real.
