By Alexander Jones, International Banker
According to figures published on March 31 by its national statistics office, the High Commission for Planning (HCP), Morocco’s gross domestic product (GDP) grew by a hefty 4.1 percent during 2025’s fourth quarter—almost equal to the 4.2 percent registered during the same period in 2024. Having recorded annual growth rates of 4.8 percent, 5.5 percent and 4.0 percent in last year’s first, second and third quarters, respectively, it is clear that Morocco is undergoing a remarkable economic transformation, which, excluding the impact of the COVID pandemic, encompasses almost 10 years of consistent expansion.
Thanks in part to its geographic position just off the coast of Southern Europe, a large share of Morocco’s economic success can be attributed to the exceptional growth in foreign direct investment (FDI). According to the latest “World Investment Report” from the United Nations Trade and Development Agency (UNCTAD), FDI in Morocco increased by 55 percent to US$1.6 billion in 2024, while L’Office des Changes, which monitors financial flows between Morocco and other countries, recorded net FDI inflows in 2025 at MAD 31.2 billion (US$338 million)—a staggering 79.8 percent more than in the previous year.
Few Moroccan industries are more emblematic of this incredible surge than the automotive sector. Morocco’s automotive industry, the African continent’s largest manufacturer and a leading exporter to the European Union (EU), has leveraged sizeable investments from global industry giants such as Renault and Stellantis to become a top exporter of finished vehicles and key components, including wiring systems, interior components, seats and powertrains.
According to the latest data from L’Office des Changes, Morocco’s export revenues for January-February 2026 reached MAD 74.8 billion, 2 percent more than the same period last year. Furthermore, the automotive sector generated more than MAD 26 billion in revenue, rendering it the leading contributor to this export surge, with a 10.3-percent growth rate. The industry’s electrical-wiring and vehicle-manufacturing sectors were particular standouts, growing by 14.8 percent and 14.5 percent, respectively.
Morocco’s efforts on the transportation front don’t stop at automobiles. Perhaps with an eye on its role as co-host of the 2030 FIFA World Cup alongside Spain and Portugal, the country is making enormous infrastructure investments nationwide. Tanger Med, for instance, is a major industrial complex located on the Strait of Gibraltar at the northernmost part of the country, the site of Africa’s largest port, which handles up to 9 million containers, 7 million passengers, 700,000 trucks and 1 million vehicles per year and connects to more than 180 ports globally.
Major funding is also being directed toward enhancing public transport. The continent’s first high-speed rail system, which was inaugurated in 2018 with the debut of the Al Boraq service between the cities of Tangier, Casablanca and Rabat, is currently being extended to Marrakech, while the cities of Agadir, Fez and Oujda are expected to be added to the nationwide network through the planned addition of up to 1,500 kilometres of new lines.
Tourism represents another pivotal node in Morocco’s stellar growth story. The country welcomed 19.8 million international visitors in 2025, which was considerably more than the 17.4 million recorded in 2024. Momentum continues to look strong this year, with the Ministry of Tourism, Handicrafts, and Social and Solidarity Economy (MTHSSE) noting that Morocco’s tourism sector recorded 4.3 million arrivals in the first quarter, 7 percent more than the same period a year earlier (including an 18 percent year-on-year rise in March numbers alone). These numbers are boosting revenue, which reached MAD 21.4 billion by the end of February, up 22.2 percent from a year earlier, according to data from L’Office des Changes.
The MTHSSE has also confirmed that tourism growth is being recorded as part of Morocco’s strategic 2023-2026 tourism roadmap, which prioritises air connectivity, attracting international visitors from a wider range of markets and improving accommodation and entertainment throughout the country. Morocco is “moving in the right direction,” Fatim-Zahra Ammor, tourism minister, recently confirmed. “Moroccan tourism is on track. March 2026 sends a strong signal, and we’re focused on keeping this momentum going throughout the year.”
While the Moroccan economy has certainly notched up some impressive wins in recent times, the picture is not entirely rosy.
While the Moroccan economy has certainly notched up some impressive wins in recent times, the picture is not entirely rosy. At 13.0 percent (as of the fourth quarter of 2025), unemployment remains a clear pain point, having only marginally improved from 13.3 percent in 2024, reflecting the long-term challenges facing the labour market. A report published in early February by the HCP found that while 193,000 new jobs were generated between 2024 and 2025, the number of unemployed people fell by just 17,000.
At the same time, the unemployment rate for young people aged 15 to 24 continued to rise alarmingly, from 36.7 percent to 37.2 percent, while the rate of underemployment—those who do not have enough paid work or who are not doing work that fully employs their skills and abilities—increased from 10.1 percent to 10.9 percent. Gender inequality, meanwhile, may be the most glaring aspect of the labour market’s underperformance, with the female employment rate standing at just 15.1 percent, in stark contrast to the male rate of 61.1 percent.
“This gap between modernisation and inclusion encapsulates Morocco’s most profound contradiction: an export-driven, infrastructure-rich economy that has failed to create enough meaningful jobs for its young population,” Dr. John Calabrese, a non-resident senior fellow at the Middle East Institute, wrote in an October 2025 article for Modern Diplomacy. “The country’s growth model has generated wealth but not opportunity at scale. Growth has averaged below 4 percent since 2011—insufficient to absorb new entrants into the labour market, particularly as Morocco experiences a pronounced youth bulge. The glitter of new rail lines and port terminals contrasts sharply with the frustration of young graduates facing joblessness in secondary cities.”
According to the Institute for Research in Economic and Fiscal Issues (IREF), moreover, a combination of government overreach, rigid labour laws, stifling regulations and crony capitalism is “choking” private initiative and crushing job creation, which, in turn, is contributing to a “ticking social time bomb” for Morocco. Indeed, the lack of job opportunities reached such a pronounced nadir that it sparked a series of youth-led protests, with demands for reductions in unemployment and inequality addressed directly to the monarchy and the state.
“The country consistently ranks below both regional and global averages in labour freedom, with policies that disproportionately burden private businesses, especially small and medium-sized enterprises (SMEs), which are the main drivers of job creation. These businesses face high labour costs, strict dismissal rules, and one of the region’s highest minimum wages,” the Paris-based European think tank reported in July 2025. “For instance, only firms with more than ten employees can legally lay off workers for economic, technical, or structural reasons—and even then, the process is complex and costly. These rigidities stifle innovation, deter investment, and leave many young people out of formal employment.”
The IREF also recommended that the state reduce its interventions in the labour market to allow businesses more freedom to grow, hire and innovate. “Moroccan policymakers must stop viewing markets as threats and embrace a bold reset: fewer barriers, freer markets, and a strong commitment to open and fair competition,” according to the think tank’s economic researcher, Mohamed Moutii. “Sustainable job creation will not come from state-led programs—it will come from unleashing the power of private initiative. Moroccans don’t need handouts—they need a level playing field. That begins with trusting the market, empowering individuals, and breaking down the barriers that keep millions excluded from the economy.”
Regarding future expectations for the Moroccan economy, the International Monetary Fund (IMF) has forecast growth of 4.4 percent in 2026, 4.5 percent in 2027 and 4 percent over the medium term, assuming normalised agricultural production and continued infrastructure investment with greater private-sector participation. “The growth outlook in the near term is dampened by the ongoing conflict in the Middle East, which affects Morocco mainly through disruptions to global commodity markets and weaker global demand amid heightened global uncertainty,” the Fund’s March 23 assessment noted. “Inflation is expected to rise temporarily during the year from its currently low levels, mainly reflecting higher energy prices, before settling at around 2 percent over the medium term.”