Morocco’s GDP growth is expected to remain strong at +3.7% y/y in 2026, followed by +3.5% in 2027. Since 2023, Morocco has had strong growth performance above +3.5%, leaving behind the high volatility that the country experienced during the post-GFC and Covid-19 pandemic period. This expanding cycle is being driven by multiple factors. Industrial production growth has seen strong quarters and is projected to continue, with increased foreign investment in manufacturing, energy and mining. Agricultural output, which suffered in recent years due to a prolonged drought, has now turned the corner. Tourism arrivals are set to beat yet another record, growing by +20% in 2026, especially supported by the Africa Cup of Nations taking place in Morocco in January 2026. Growth should then slow but pick up again ahead of the World Cup that will take place partly in Morocco in 2030. Consumer and government spending continues to show signs of strength, with consumer sentiment growing and government revenue on the rise.  Inflation is expected to remain subdued at 1.0% y/y in 2026, a similar level as 2025, even though higher spending during the football events could spark an uptick in some service-oriented goods and services.  

Despite the strong macroeconomic performance, the Moroccan business community and households continue to face significant challenges. Insolvencies are projected to stabilize in 2026, after growing by +10% y/y in 2025. This trend is primarily being driven by difficulties in the retail, real estate and construction sectors. Late payments have been identified as a major factor contributing to business failures. Unemployment remains among the top risks in Morocco, especially among youth, where it remains 35%. Three-quarters of the workforce are in the informal sector and the gap between rural and urban centers continues to increase.

Morocco is actively pursuing a decades-long development plan to elevate its income level from low-middle income to higher-middle income. While the plan does not have the same capital resources as those of the Gulf nations, it focuses on diversification, investment attraction and renewable energy as key priorities. A significant portion of spending is allocated to large-scale projects. In the 2025 budget, Morocco will prioritize the construction of sports venues for the Africa Cup of Nations in 2025 and the World Cup 2030, which it will host alongside Spain and Portugal. Additionally, defense spending is set to increase under the planned budget for 2025.

The budget also includes funds for the development of the Atlantic pipeline, intended to connect Nigeria's gas fields to Morocco through 13 other countries, although this expensive infrastructure project still requires international financing for completion. Morocco aims to enhance its role as an energy hub. On the renewable energy side, the government has focused on attracting solar and green hydrogen investments, in line with the EU's energy transition goals. The country has also awarded several contracts to global oil firms for offshore and onshore exploration, although significant discoveries have yet to be made. France's recent announcement recognizing the autonomy of the Western Sahara under Moroccan authority, a position in line with that of Spain and the US, will open the door to French businesses and investments, given the rich natural resources from fish to phosphates in the region. However, recent European Court of Justice decisions have impacted fishing and farming agreements between the EU and Morocco, affecting EU fishermen and Moroccan businesses in the region.

Social dynamics in Morocco have become increasingly active, with increasing demonstrations, reflecting public sentiment on various issues. The government continues to allow some peaceful protests while focusing on strengthening key international relationships, particularly in the defense and technology sectors. In parallel, youth unemployment remains elevated at above 20%, a broader trend across the Mediterranean region. Although the government is pursuing initiatives to address it, high youth unemployment levels continue to pose a challenge for the economic and social context of the country.