Morocco: GDP Growth Path According to S&P and Its Implications for the MASI

S&P has assessed that Morocco's growth prospects are "solid," projecting an average real GDP growth of 4% for the period from 2025 to 2028. However, these prospects remain vulnerable due to the adverse effects of climate change on agricultural production. Based on this, we estimated the MASI targets for 2026-2028 using statistical relationships observed since 2019. The correlation between MASI levels and GDP is 0.88, while the correlation of annual variations is 0.71. We employed three methods, which were then aggregated: 1. Level regression (MASI = a + b × GDP) 2. Log-log regression (elasticity ≈ 1.26) 3. Growth link (ΔMASI ≈ 2.2% + 1.24 × ΔGDP) The central value is the average of the three models, while the range reflects the minimum and maximum estimates. Potential MASI targets (central scenario & ranges) based on S&P's nominal GDP trajectory are as follows: - **2026**: GDP S&P ($194.3 billion), MASI – Central Scenario: 20,720; Range: 19,645 – 22,367 - **2027**: GDP S&P ($206.4 billion), MASI – Central Scenario: 22,508; Range: 21,197 – 24,596 - **2028**: GDP S&P ($218.9 billion), MASI – Central Scenario: 24,394; Range: 22,825 – 26,996 The central scenario indicates a MASI that continues the upward trend of nominal GDP, reaching approximately 20.7k in 2026, 22.5k in 2027, and 24.4k in 2028. These levels should be interpreted as macro-correlated benchmarks rather than fixed targets, as interest rate cycles, corporate profitability, and local and foreign flows will significantly influence deviations from this trajectory. Limitations and Precautions: These estimates should be interpreted with caution. The sample period from 2019 to 2025 is short, and the observed relationship may be unstable and non-causal. Since nominal GDP includes inflation, a faster-than-expected disinflation could alter the trajectory of GDP in dollar terms. Additionally, several key variables are not modeled, including interest rate trajectories, corporate results, flows, exchange rates, and idiosyncratic shocks. Finally, regime shifts—such as a return to Investment Grade, index reweightings, market reforms, and geopolitical factors—could lead to temporary decouplings.