Morocco’s economy grew by 4.9% in 2025, up from 4.4% in 2024, while inflation remained at 0.8% and the budget deficit narrowed to 3.5% of gross domestic product (GDP), according to the Finance Ministry’s Directorate of Studies and Financial Forecasts.
The directorate’s 2025 annual activity report highlights improvements in macroeconomic indicators, including stronger growth, contained inflation and better public finances. However, its research also points to persistent structural weaknesses in the labor market and the sources of economic growth, particularly the limited contribution of employment and the predominance of structural factors in unemployment.
The budget deficit fell by 0.3 percentage points, supported by a 14.2% increase in ordinary revenue, which outpaced the 12% rise in overall expenditure.
Domestic demand remained a key driver of activity, supported by measures to protect household purchasing power, a 2.6% increase in remittances from Moroccans living abroad, 5% growth in consumer loans, favorable labor-market developments and increased investment in major projects.
Despite the improved annual performance, the directorate found that Morocco’s average long-term economic growth rate had slowed from 4.6% between 2000 and 2011 to 3.3% between 2012 and 2017, before reaching 3.2% between 2018 and 2023.
Capital accumulation drives economic growth
A study based on growth-accounting methodology derived from economist Robert Solow’s model found that capital accumulation was the main driver of Morocco’s GDP growth between 2000 and 2023, while labor made a comparatively limited contribution.
Labor’s contribution turned negative in the final years of the period examined. Total factor productivity, meanwhile, followed a mixed trajectory, contributing positively during the early 2000s before stagnating between 2012 and 2017 and recovering some momentum after the COVID-19 pandemic.
The sectoral analysis also found uneven contributions to growth, with declining contributions from some industries and subsectors and insufficient gains elsewhere to compensate for those losses.
Investment indicators strengthened in 2025. Foreign direct investment receipts rose by 28%, imports of capital goods increased by 13.3%, equipment loans grew by 25.4%, and capital expenditure in the state budget rose by 6.7%.
The directorate attributed these developments to the continued implementation of major structural projects, which supported investment activity.
A separate study covering 2004-2022 found that labor productivity accounted for 86% of per capita GDP growth, compared with 13% for employment, making productivity the principal driver of gains in output per person.
The study found that 62% of labor productivity growth resulted from the reallocation of workers between economic sectors, reflecting the expansion of services. The remaining 38% came from productivity gains within sectors, particularly agriculture and services.
Regional analysis showed that most productivity gains occurred within individual regions, while the contribution of labor movements between regions remained very limited, reflecting persistent territorial economic disparities.
Demographic changes weigh on living standards
The directorate’s research also examined the impact of demographic changes on economic growth. Between 2000 and 2023, demographic factors reduced annual per capita GDP growth by an average of 0.6 percentage points.
The effective dependency ratio accounted for a negative contribution of 0.7 percentage points annually, according to the study.
Capital accumulation remained the main driver of improvements in living standards, but declining productivity, lower employment rates and population aging were increasingly acting as constraints.
Following the findings of Morocco’s 2024 General Population and Housing Census, the directorate developed three scenarios for living-standard trends through 2050.
The first assumes a continuation of previous labor productivity trends. The second envisages productivity gains sufficient to offset the negative effects of demographic change, while the third assumes faster productivity growth that would allow living standards to increase 2.5-fold.
Structural unemployment limits job creation
A study using quarterly data from 2006 to 2024 found that structural factors dominate the evolution of unemployment in Morocco.
The directorate used a state-space statistical model supported by a Kalman filter to distinguish between the underlying trend in unemployment and temporary fluctuations.
The analysis identified recurring seasonal increases in unemployment during the first and third quarters, followed by relative declines in the second quarter. Since 2020, however, these fluctuations have become less significant as the structural component of unemployment has risen more persistently.
According to the study’s accompanying chart, the observed unemployment rate ranged between 12% and 13.5% in recent years, compared with approximately 9% to 10% before 2020.
The directorate identified several factors behind the structural nature of unemployment, including insufficient creation of qualified jobs, a mismatch between workers’ skills and employers’ needs, the size of the informal economy, and unequal access to employment across regions, genders and age groups.
It recommended stronger coordination between vocational and educational training systems and labor-market requirements, as well as more targeted support for very small, small and medium-sized enterprises and businesses founded by young people.
The directorate also called for active employment policies to be adapted to regional conditions and the needs of vulnerable groups, alongside stronger support for sectors capable of generating sustainable, skilled jobs.
Formal employment expands despite structural challenges
The report also identified positive developments in formal employment, based on administrative data from Morocco’s National Social Security Fund (CNSS).
The number of employees covered by stable formal employment arrangements rose from 1.85 million in 2017 to 2.51 million in 2024, representing average annual growth of 5.2%.
Sectoral labor mobility also increased, with the rate rising from 4.4% in 2018 to 5.6% in 2024, indicating more frequent movement of employees between economic activities.
As part of the government’s employment-policy monitoring framework, the directorate was tasked with coordinating a unit responsible for consolidating and analyzing employment data. The unit was established under Head of Government Circular No. 04/2025, issued on February 26, 2025, concerning the employment roadmap.
The directorate subsequently developed an interactive labor-market dashboard that tracks indicators by gender, age, place of residence, region and economic sector. It combines quarterly monitoring with annual data to provide policymakers with a consolidated and updated picture of employment trends.
The directorate also developed real-time analytical and forecasting tools, including a GDP growth estimation model using neural networks and Google search indicators, as well as a quarterly unemployment-monitoring model based on search activity related to the labor market.
According to the report, the latter model reproduced broad unemployment trends reasonably well between 2005 and 2025.
Regional diversification and exposure to artificial intelligence
Using detailed CNSS data averaging approximately 3.5 million observations per month between 2017 and 2024, the directorate also assessed opportunities for regional economic diversification.
The findings identified Casablanca-Settat and Marrakech-Safi as regions with significant potential to expand their areas of specialization and, in turn, their employment bases, provided that appropriate training policies are implemented.
The research agenda also included an assessment of the exposure of jobs to artificial intelligence. The study found that exposure remained moderate and relatively stable between 2017 and 2024, with higher concentrations in services and technologically advanced industries, particularly finance, insurance and communications.
Taken together, the findings point to an economy that has improved its short-term macroeconomic performance but continues to face challenges in translating growth and investment into broader employment gains. The directorate’s research suggests that productivity, skills alignment, demographic change and regional disparities will remain central to Morocco’s longer-term growth prospects.
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