Moroccan domestic demand increased by 5.4% in the 4th quarter of 2024

1. Private and public sector
2. Economic challenges for 2025

The Moroccan economy experienced 5.4% growth in domestic demand during the fourth quarter of 2024contributing 6.2% to overall economic growth, according to the latest update from the High Commission for Planning (HCP).

Households were the center of attention, with household consumption recording an annual increase of 3.2%, adding two percentage points to GDP growth. Although rural incomes fell due to the drought, other factors helped maintain household purchasing power.

These include general price stability, increased wages for public sector workers, social assistance programs and renewed access to consumer credit.

At the household level, the strongest consumption was the demand for finished products, especially vehicles, which led to a 58.1% increase in imports into the automobile market at the end of the year .

Private and public sector

Public spending also increased during the period, with public consumption growing by 3.9%, 0.1% more than in the same quarter of 2024. This increase is mainly due to expenses related to administrative operations.

Public sector growth has been driven by infrastructure projects, including water resources development and preparations for this year’s Africa Cup of Nations and the FIFA World Cup, scheduled for 2030.

Unlike government spending, the private sector adapted to the slowdown in export activity but still contributed to the overall expansion. Although private saving improved slightly, the pace of investment growth outpaced these gains, leading to an increase in the budget deficit and corporate debt.

Gross investment increased by 9.8% from the previous year, adding 3.5 percentage points to economic growth. This growth was supported by an increase in foreign direct investment and imports of industrial equipment.

Private companies are likely to reduce their investment activities due to weak growth in external demand and increasing wage costs, while public investments in infrastructure, sporting events and water desalination projects water will remain important. Thus, the HCP forecasts that gross investment will increase by 8.8% during the first quarter of 2025.

Regarding the above, the increase in external financing needs, driven by growth in domestic demand, represented 3.8% of GDP in the third quarter of 2024.

This increase depends on the agricultural sector, as precipitation is expected to return to near-normal seasonal levels over the winter. Furthermore, the HCP forecasts that non-agricultural activities will maintain above-trend growth, with rates of 3.7 and 3.5% estimated for the last quarter of 2024 and the first quarter of 2025, respectively.

Economic challenges for 2025

Morocco faces significant economic challenges linked to its dependence on the agricultural sector and climate vulnerability. Furthermore, youth unemployment and economic inequality are also a major problem for the country’s economy.

Agriculture accounts for around 15% of the country’s GDP, and in recent years agricultural production has suffered from drought. This is why Morocco has implemented a national policy to combat climate change in order to mitigate its vulnerability.

Another challenge is youth unemployment (15-24 years), because in the second quarter of 2024 the rate reached 48.8%, which is 2.7% more than in the same period of the previous year . For this reason, the Moroccan government has presented employment plans aimed at overcoming this crisis and seeks to improve economic inclusion and encourage job creation.

Furthermore, Morocco is tackling wage inequality by increasing the minimum wage in the private sector by 5% from January 1 of this year, which will apply to both agricultural and non-agricultural activities.

Morocco’s domestic demand is expected to maintain its positive trajectory in the first quarter of 2025 and be supported by a more flexible monetary policy and the implementation of fiscal and social measures aimed at strengthening household purchasing power. In addition, annual growth is expected to reach 4.8%, one point more than during the same period last year.