In-Depth Analysis: Nadia Fettah on Morocco’s Economy (July 2025)

+4% Growth: Encouraging, but Structurally Insufficient

• Morocco expects economic growth above 4% in 2025, signaling post-crisis recovery and solid performance in a global context of uncertainty.

• However, this rate remains insufficient to structurally reduce unemployment, especially among graduates (youth unemployment remains over 18%) and to meaningfully close urban-rural gaps.

• Risk: Growth remains regionally concentrated (Casablanca, Tangier, Agadir), deepening territorial inequalities.

2. Economic Diversification: Progress Made, but Still Uneven

• Morocco is advancing in automotive, aerospace, tourism, agri-food, and renewable energy.

• Strengths:

  • Now the 2nd largest car exporter in Africa.

  • Major solar (Noor Ouarzazate) and wind projects.

• Challenges:

  • Low local value-added: industries are still largely based on assembly, not full-scale production.

  • Agriculture, which still employs 30% of the labor force, is highly vulnerable to climate shocks.

  • The informal economy, estimated at ~30% of GDP, remains largely unaddressed.

3. Fiscal Policy: Delicate Balance Between Discipline and Social Ambition

• Targets include reducing the deficit to 3.5% of GDP and keeping debt below 69% by 2026.

• These goals offer reassurance to investors and international lenders, but may conflict with social spending needs.

• Concern: Austerity-style discipline could limit the rollout of universal social protection and public services in underserved regions.

4. Tax Reform: A Step Toward Fairness, but Politically Sensitive

• Key reforms include:

  • Exemption of salaries under MAD 6,000/month from income tax.

  • Gradual reduction in corporate tax (20% for industrial firms).

• Positive: Encourages formalization and lowers tax pressure on low-income workers.

• Caution: Morocco still has low tax pressure (approx. 21% of GDP) and persistent tax evasion, especially in liberal professions and the informal sector.

5. Capital Markets: Dynamic but Elitist

• The Casablanca Stock Exchange rose by 37%, with increasing activity in investment funds (OPCVM, OPCI).

• Weakness:

  • Financial inclusion is limited: only a minority of citizens participate.

  • Lack of financial literacy and trust in financial institutions are barriers to broader savings mobilization.

6. Economic Sovereignty and Green Transition: A Strategic Shift

• Morocco is investing in:

  • Renewable energy (solar, wind, green hydrogen).

  • Water infrastructure, including large-scale desalination plants to combat drought.

• However:

  • Heavy reliance on foreign funding and technology.

  • Still lacks control over strategic supply chains (e.g., semiconductors, pharmaceuticals, machinery).

7. Geostrategic Position: A True Asset, but Requires Institutional Reform

• Morocco markets itself as a bridge between Africa, Europe, and the Middle East.

• Successful global positioning depends on:

  • A predictable judicial system.

  • Stronger anti-corruption efforts.

  • Investor protection laws that build confidence beyond incentives.

8. Social Inclusion: The Weakest Link

• Reforms in health insurance and direct financial assistance are progressing.

• Women’s cooperatives and rural entrepreneurship are being promoted.

• Shortcomings:

  • Public education and healthcare remain deeply unequal and under-resourced.

  • Female labor force participation is still very low (~20%).

• Structural problem: Many social programs remain underfunded or poorly implemented, especially outside urban centers.

Summary Table

Nadia Fettah’s economic policy reflects a hybrid model:

• Liberal and disciplined in its macroeconomic framework (fiscal balance, capital markets).

• Ambitious and state-led in its social and environmental goals (universal coverage, climate resilience).

However, its long-term success will depend on Morocco’s ability to:

• Strengthen human capital (through education and health).

• Rebuild trust in public institutions.

• Translate macroeconomic growth into tangible, inclusive development.