Growth: Bridging the Gap Between Promise and Economic Reality
The new government is projecting a growth rate of 3.7% for next year, while Bank Al-Maghrib anticipates 2.9% and the HCP (High Commission for Planning) expects 3%. Additionally, the government promises a budget deficit of 3%, which the central bank views at 3.5%.
The first budget under Prime Minister El Mansouri highlights a notable discrepancy: 3.7% growth for Rabat, compared to 2.9% for Bank Al-Maghrib and 3% for the HCP. The new administration has inherited a framework from the outgoing government, which had previously forecast a growth rate of 4.1%. However, this forecast has been revised downward, though not sufficiently to align with other institutions’ estimates.
The Harvest Trap
Officially, the decline is attributed to agriculture. Following an exceptional harvest of 93 million quintals, the government has adjusted its expectation to 70 million for 2027. This year, agricultural activity has benefitted from the return of rain. Bank Al-Maghrib expects a growth increase of 16% in the agricultural sector. However, the government is now projecting only a 0.5% rise for next year. The HCP is even more pessimistic, anticipating a decrease of 6.8%, while Bank Al-Maghrib expects a 7.6% drop. A significant part of this disagreement lies in these figures.
But rainfall isn’t the only factor at play. Bank Al-Maghrib has downgraded its forecast for non-agricultural activities in 2026, predicting only a 3.1% increase after initially more optimistic projections earlier this year. The central bank indicates that mining and industrial sectors are not performing as well as expected.
A Bounce Yet to Be Proven
Despite the differing forecasts, all parties are betting on a rebound. In 2027, both the government and Bank Al-Maghrib are anticipating growth of around 4% excluding agriculture, while the HCP is predicting 4.2%. This rebound represents the true gamble of the budget, as this sector has stagnated, showing only a 3.9% increase in 2025, compared to a 5.1% increase in 2024.
A Decade of Dependence
This observation is not new. Pre-COVID, Morocco’s economy grew by an average of 2.9% per year; between 2022 and 2024, the average growth was 3.3%. These numbers are far from the 5% average growth the new government is promising. Although past performances do not necessarily predict future outcomes, they remind us that the Moroccan economy is largely reliant on rainfall rather than industrial growth. In terms of public finances, significant improvements have been made: the deficit has fallen from 7.1% of GDP in 2020 to 3.5% last year, below pre-crisis levels, and public debt has decreased by more than five percentage points.
A Program to Finance
Building on this foundation, the government has piled on its commitments, including 62 billion dirhams in social measures and a gradual reduction of income tax until 2031, along with an ambitious average growth target of 5%. All this is to be achieved while maintaining a budget deficit of 3%.
As the year comes to a close and with the upcoming monetary policy council meeting, it will be interesting to see whether opinions converge or if the government finds itself standing alone with its projections.
