The new growth cycle of the national economy has been ongoing for over six quarters, with an average annual increase of 4.8% in non-agricultural activity per quarter. This growth has fully closed the activity gap caused by the Covid-19 health crisis and strengthened further, reaching 5.5% in the second quarter of 2025, largely due to a broad recovery across all sectors.
Manufacturing and extractive industries, construction, and accommodation have been particularly dynamic, contributing nearly 40% to overall economic growth. The acceleration in activity was notably driven by a stronger-than-expected recovery in exports, which rose by 8.5% compared to just 2.2% in the first quarter, alongside a better-oriented domestic demand increase of 9.2%.
Consumer confidence improved, leading to a 5.1% rise in household consumption expenditures, up from 4.4% in the previous quarter. Investment recovery, which has been on an upward trajectory since mid-2023, also solidified. The financial environment was generally favorable for equipment in the second quarter of 2025, with lower borrowing costs and continued declines in import prices for industrial equipment.
The sustained strength of domestic demand resulted in a 15.7% increase in the volume of imports of goods and services in the second quarter of 2025. Improved terms of trade, due to contrasting price movements of exports and imports, along with currency appreciation, mitigated the external bill, reducing its impact on activity expansion. Consequently, the national economy recorded a growth rate of 5.5% during this period, marking its highest pace since the post-Covid recovery phase in 2021.
This performance was accompanied by a more tempered improvement in the labor market, with paid employment increasing by 1.4% year-on-year, down from 3.4% in the first quarter. Service and industrial companies tended to favor adjustments based on productivity increases rather than new hires, amid a slight rise in wage costs, particularly for minimum wage workers.
The growth revival also came with an increased financing need. Budget revenues rose for both indirect taxes and corporate tax, reflecting a broader tax base due to the activity recovery. However, expenditures, especially for employee salaries, were also vigorous, increasing by 10.8%, leading to a heightened financing need for public administrations. Thus, considering the intensified financing needs of businesses related to investment projects, the overall financing requirement of the national economy expanded to -3.2% of quarterly GDP, up from -2% the previous quarter.
In the third quarter of 2025, the national economy experienced a rebalancing after the strong rebound of the previous quarter. Primary value added slightly strengthened, while that of other activities trended upward but at a more moderate pace. Despite the strengthening of construction value added, the growth rate of secondary branches fell to 4.4% year-on-year, down from 7.4% in the second quarter.
Service dynamics also moderated, reaching 4.3%, compared to 4.8% in the previous quarter. In this context, overall GDP growth was 4.3%, down from 4.8% and 5.5% in the first and second quarters, respectively. This moderation in growth is primarily attributed to a less favorable international environment.
In Europe, economic activity was hampered by a slowdown in exports outside the eurozone and a decline in household consumption, linked to a high savings rate and rising uncertainties. Consequently, the volume of national exports of goods and services decelerated after an 8.5% increase in the previous quarter.
Meanwhile, imports, although less dynamic than in the second quarter (13.8% instead of 15.7%), grew faster than exports, contributing to an increased trade deficit and the continued constraining impact of foreign trade on economic growth (-3.7 points contribution). In contrast, domestic demand support remained, contributing 8 points to growth in the third quarter of 2025.
Investment continued to grow at a rate of 14.2%, driven by strengthened infrastructure projects and a recovery in construction, while household consumption continued to firm up at 4.1%, aided by the implementation of new budgetary measures benefiting households, including the second tranche of public sector wage increases amid moderated inflationary pressures.
Consumer prices indeed increased at a much more tempered pace in the third quarter of 2025, at 0.4% year-on-year, after 2% and 0.5% in the first and second quarters. This development was due to a slight rise in non-food prices (0.3%) and stabilization in food price growth at 0.7%. Despite this overall moderation, certain items, particularly fresh food and vegetables, showed significant and persistent price increases since the beginning of the year.
Conversely, excluding fresh products, food prices declined amid stabilization in international prices for cereals, oils, and dry legumes. On the non-food side, the slight slowdown in prices was mainly driven by continued declines in energy prices, which fell by 2.7%, compared to 2.4% in the previous quarter, reflecting an 8.8% decrease in fuel prices and the dissipation of the effects of gas tariff adjustments recorded in May 2024.
The increase in prices for manufactured goods and services decreased by 0.1 points compared to the previous quarter, keeping their contribution to overall price evolution nearly unchanged. Core inflation, excluding energy, regulated prices, and volatile prices, slowed to 0.8%, down from 1.1%, primarily due to a decline in its food component.
Credit dynamics and money supply moderated slightly in the third quarter of 2025, with claims on the economy rising by 6.5% year-on-year, down from 7.4% and 7.7% in the previous two quarters. This deceleration was attributed to a reduction in cash credits to businesses, while equipment loans remained robust. The liquidity needs of banks generally eased, although remaining at a high level, prompting Bank Al-Maghrib to reduce the volume of its financing to banking institutions.
Net claims on the central administration increased, reflecting a 1.3% rise in Treasury monetary debt, while official reserve assets grew by 12.6%. Overall, the money supply slightly slowed, with a 7.7% increase in the third quarter of 2025, after 8% the previous quarter. After reducing its rate by 25 basis points in the first quarter of 2025, Bank Al-Maghrib maintained its key rate at 2.25% in the third quarter.
Under these conditions, the interbank rate stabilized at the key rate, declining by 50 basis points year-on-year. Credit rates followed the same trend, averaging a decrease of 27 basis points. Treasury bill auction rates also decreased, showing respective declines of 72, 72, and 76 basis points for maturities of 1, 5, and 10 years.
In the foreign exchange market, the dirham appreciated by 1.8% against the euro and by 7.7% against the dollar. Meanwhile, the stock market maintained its performance in the third quarter of 2025, despite a temporary correction in September due to profit-taking. Since the beginning of the year, the upward trend has persisted, supported by favorable investor sentiment and an accommodative monetary policy.
The rise in indices affected nearly all listed companies, amid improved banking financing conditions and reduced inflationary pressures. The MASI index increased by 32.4% in the third quarter of 2025 year-on-year, while market capitalization rose by 35.3%. This performance primarily reflected price increases in the engineering and industrial equipment sectors, transportation, mining, tourism and hospitality, pharmaceuticals, electricity, and health.
Market liquidity continued to grow, with a 165.7% increase in transaction volume.
Looking ahead, the national economy is expected to register a slight acceleration in the fourth quarter of 2025, with a projected growth rate of 4.7%, compared to 4.3% anticipated in the third quarter. Foreign demand prospects are more favorable compared to the previous quarter, particularly due to expected effects from the gradual easing of interest rates on consumption and investment in Europe.
At the same time, the factors supporting domestic demand during the first three quarters of 2025 are expected to persist. Household consumption will benefit from continued improvements in purchasing power, bolstered by public and private wage increases and income tax gains. Its annual growth could reach 4.4%, while investment is expected to continue its upward trend at a rate of 12.6%, driven by increased capital expenditures from non-financial companies and strengthened public investments.
By sector, services will continue to support growth, showing a 4.7% increase in the fourth quarter of 2025 year-on-year. Trade, non-market services, and those aimed at individuals will exhibit the strongest dynamics. The industrial sector is anticipated to experience a slight recovery, primarily driven by activities related to quarry minerals, automotive, and electrical industries, while the construction sector is expected to accelerate significantly, contributing 0.4 points to overall growth.
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