Morocco

Morocco, strategically located at the crossroads of Europe, Africa, and the Middle East, has long leveraged its geography, political stability, and open economy to position itself as a regional hub for trade, investment, and diplomacy. With a population of about 37.8 million and GDP of about $146 billion (2024), the country combines a deep cultural heritage and strong institutions with ambitious modernization and reform agendas. Over the past two decades, Morocco has pursued large-scale infrastructure investments, advanced regionalization, and closer integration into global markets.

The economy is diversified: services account for about half of GDP, industry a quarter, and agriculture remains vital for jobs and rural welfare. Growth is driven by robust manufacturing, services exports, and tourism recovery, while prolonged drought has underscored climate vulnerabilities and water scarcity. Flagship sectors include phosphates and fertilizers, automotive and aerospace industries, tourism, agri-food and fisheries, and a rising digital/offshoring niche. Tangier-Med consolidates Morocco’s role as a logistics hub, while investments in renewables, green hydrogen, and EV-related value chains reflect its industrial transition.

Urbanization is about 65%, concentrating growth in cities but leaving rural and spatial disparities. Poverty has declined (3.9% in 2022), though inequality (Gini ~40.5) and urban–rural gaps remain high. Unemployment is elevated, particularly for youth and women, with female labor force participation at just 19%. Informality is pervasive, MSMEs face financing and skills barriers, and human capital challenges persist despite gains in health and schooling. Expanding social protection, governance reforms, and fiscal consolidation aim to strengthen resilience.

Near-term growth is moderated by agricultural contractions, though non-agricultural activity and remittances remain solid. Inflation has eased, allowing some policy space. Medium-term prospects depend on sustaining private-sector dynamism, enhancing water security, boosting inclusion—especially of women and youth—and deepening competitiveness and productivity to build a greener, more resilient economy.

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Despite a confluence of severe shocks (the COVID-19 pandemic, a prolonged drought, a high commodity prices-led inflationary surge, and a devastating earthquake in 2023), Morocco has demonstrated remarkable economic resilience thanks to a robust macroeconomic policy framework, proactive government response, and the ongoing deepening of structural reforms. For instance, the Moroccan authorities have expanded health insurance coverage, deployed a wide-ranging cash transfer program, and implemented education reform to improve learning outcomes. On the fiscal front, the government has made steadfast progress in tax policy and admin reforms, reducing energy subsidies, and implementing SOE reforms. On climate adaptation and mitigation, Morocco is investing in infrastructure to address water scarcity and is committing to ambitious decarbonization targets.

Additionally, the government recently pledged to prioritize job creation in the years to come as the labor market remains weak. Real GDP growth accelerated to 4.7 percent in 2025 (vs 3.8 percent in 2024), owing to a robust non-agriculture growth at 4.8 percent, with strong contributions from tourism, mining, and construction. Domestic demand has been mainly driven by a sustained expansion in gross fixed capital formation of about 16.8 percent in 2025. Supported by an appropriate monetary policy response by BAM, inflation receded from a high of more than 10 percent in February 2023, resulting from the supply shock to 0.8 percent in 2025.

Morocco’s external position remains strong. While manufacturing exports, tourism inflows, and remittances have been solid and fast-growing, fast-growing imports resulting from the recovery of domestic demand widened the current account deficit to 2.1 percent of GDP in 2025, largely financed by Foreign Direct Investment (FDI).

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The Morocco Integrated Disaster Risk Management and Resilience Program has significantly enhanced Morocco’s disaster and climate resilience. It has helped develop a comprehensive national Disaster Risk Management (DRM) strategy and supported structural risk reduction investments for over 174,000 beneficiaries. Notably, the program has insured nearly 9 million people against bodily injury from catastrophic events and established a solidarity fund benefiting nearly 6 million of Morocco’s poorest and most vulnerable people.

The Rural Water Supply Project has connected more than 1.1 million people in remote villages in Morocco to a reliable and safe water supply. This initiative has significantly improved the quality of life by reducing water-borne diseases and creating employment opportunities for over 2,000 local standpipe caretakers. This project has been pivotal in providing access to clean water, enabling more children to attend school regularly and adults to engage in productive activities.

The Public Sector Performance (ENNAJAA) program, aimed at improving the performance and transparency of government operations and service delivery, has yielded significant results, including an increase of nearly 7 percent in additional tax revenues through better compliance at the national level and a 22 percent increase in revenues collected by the 10 largest municipalities at the subnational level. Additional financing for this program will support a focus on modernizing public administration through digitization and reforms in public financial management.

The World Bank's loan aimed at Enhancing Early Childhood Development (ECD) Outcomes in Rural Morocco supported the third phase of the National Initiative for Human Development (INDH), with a particular focus on early childhood development. Since the Ministry of National Education, Preschool, and Sport (MENPS) launched the preschool expansion program in 2018, the enrollment rate for children aged four and five has increased from 45% to 78.7% nationwide in 2024. Ongoing efforts also involved creating and implementing an innovative behavior change strategy to improve nutrition and maternal and child health indicators.

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The World Bank Group Country Partnership Framework for Morocco (CPF) covers FY2019 to 2025 and incorporates the objectives of government programs from the five-year period 2017-2021, such as the National Initiative for Human Development.

Morocco Country Partnership Framework for the period FY2019 - FY2024

The CPF contains the overarching goal of improving conditions for growth and job creation by pursuing three areas of strategic focus:

• (a) promoting job creation by the private sector;
• (b) strengthening human capital; and
• (c) promoting inclusive and resilient national development.

Improving governance and citizen engagement are foundational principles of the CPF, complemented by gender and the digital economy as cross-cutting themes. Morocco and the World Bank have agreed on critical results to be achieved by 2025, particularly regarding increasing opportunities for private sector growth with a focus on women and youth employment, tackling climate change, improving the quality and effectiveness of health delivery and education systems, supporting Morocco's fundamental social policy reform, and increasing public spending efficiency.

Building on this, the refreshed 2026–2035 CPF will emphasize learning and adaptation, underpinned by in-depth diagnostics to guide operations. It will support implementation of Morocco’s priority reforms, maximizing impact--particularly on private sector jobs, inclusion, climate resilience, and service delivery--through more selective, flexible, and results-focused interventions tailored to Morocco’s needs and priorities.

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Climate change poses a serious threat to Morocco’s economic growth and human potential, but with the right investments and policies in place, a more sustainable future is possible.

A new World Bank diagnostic tool, The Country Climate and Development Report, explores the linkages between climate and development and identifies priority actions to build resilience and reduce carbon emissions while supporting economic growth and reducing poverty.

Morocco Country Climate and Development Report

The report identifies three priority areas: tackling water scarcity and droughts; enhancing resilience to floods; and decarbonizing the economy. The report also looks at the cross-cutting issues of financing, governance, and equity.

The underlying message in the report is that if Morocco invests in climate action now and takes the appropriate policy measures, the benefits will be immense. Ambitious climate actions will help to revitalize rural areas, create new jobs, and position the Kingdom as a green industrial hub, while also helping Morocco to reach its broader development goals. The report identifies key pathways to decarbonize the economy, reducing reliance on fossil fuels and massively deploying solar and wind power.

The report estimates that total investment needed to put Morocco on a resilient and low carbon pathway by the 2050s would be around $78 billion in present dollar value. These investments could be gradual and that with the appropriate policies in place, the private sector could shoulder much of the cost.

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