Economic Slowdown and External Challenges
The anticipated slowdown in Morocco's economy is largely attributed to a deceleration in the manufacturing sector, which has been adversely affected by weakened external demand for metal, metallurgical, electronic, and textile industries.
In this context, external trade has continued to exert pressure on growth, subtracting 4.3 percentage points from GDP in the third quarter.
Domestic Demand as a Stabilizing Force
Amid this downturn, domestic demand has emerged as a crucial buffer. Investment levels have remained robust, bolstered by ongoing public spending on infrastructure and a rebound in corporate equipment investments.
Household consumption has also shown improvement, albeit at a more moderate pace, increasing by 3.9% in the third quarter, down from 5.1% in the previous quarter.
Non-market services, financial services, real estate, and agriculture have continued to play a stabilizing role, ensuring that overall economic activity remains above its trend level.
Macroeconomic Resilience and Budget Deficit
Despite a widening budget deficit, internal macroeconomic balances have shown signs of resilience, with the financing needs of the economy slightly easing.
Stabilized Growth and Declining Inflation by End of 2025
By the fourth quarter of 2025, growth is expected to stabilize at 4%, supported by strong internal drivers and robust service export performance, particularly due to the hosting of the Africa Cup of Nations.
Increased visitor spending is anticipated to benefit sectors such as hospitality, dining, transportation, and recreational services, partially offsetting the ongoing weakness in goods exports.
Additionally, a moderation in imports has helped reduce the negative impact of external trade on growth to -3.3 percentage points, down from -4.3 percentage points in the previous quarter.
Inflation Trends and Monetary Policy
On the inflation front, the rate has continued to decline for the third consecutive quarter, registering at -0.1% in the fourth quarter, following a 2% rate at the beginning of the year.
This trend is primarily driven by falling food prices, supported by a bountiful national harvest and easing international prices, along with a decrease in energy costs.
Core inflation has also entered negative territory.
Accommodative Monetary and Financial Environment
In this disinflationary environment, Bank Al-Maghrib has kept its key interest rate unchanged at 2.25%. Financing conditions remain favorable, with interbank rates stabilizing, lending rates continuing to decline, and Treasury bond yields decreasing across the curve.
The dirham has depreciated against the euro while appreciating significantly against the dollar, reflecting the varied movements of major currencies.
This environment has continued to support the equity market, which maintained an upward trajectory in 2025 despite a technical correction in November. The MASI index rose by 27.6% year-on-year, with widespread gains, particularly in mining, industrial equipment, pharmaceuticals, transportation, and leisure sectors, although liquidity has slightly declined.
Outlook for Early 2026
Looking ahead to the first quarter of 2026, growth is projected to accelerate moderately to 4.2%, driven by a rebound in agricultural activities and sustained momentum in the services sector.
Household consumption is expected to increase by 3.9%, while investment is likely to maintain a strong pace, supported by public infrastructure spending.
However, this scenario remains vulnerable to persistent external risks, including a slowdown in European demand, tightening regulatory constraints, and intensifying international competition.
In this context, the national economic trajectory hinges on a delicate balance between external pressures and internal resilience factors, which continue to support growth at this stage.