While many emerging economies continue to struggle to regain their pre-pandemic growth momentum, Morocco stands out as a notable exception. Since 2022, the growth of non-agricultural activities has averaged 4.4%, a remarkable 1.3 percentage points above its historical average. This robust performance has allowed the nation to steadily recover the economic ground lost during the health crisis.

These are the primary findings of a Policy Paper published earlier this month by the Policy Center for the New South, authored by Abdelaziz Ait Ali, Mahmoud Arbouch, Fahd Azaroual, Karim El Aynaoui, and Adnane Lahzaoui. Beyond a simple cyclical diagnosis, the study delves into a fundamental question: is Morocco on a path to a sustained economic transformation, or is it merely benefiting from an unusually favorable international environment?

+ Growth propelled by substantial public investment + 

The report’s initial insight reveals that Morocco’s economic resurgence is primarily underpinned by investment.

With an investment rate approaching 30% of its GDP, the Kingdom ranks among the most investment-intensive economies in its category. The authors largely attribute this dynamism to significant investments by the state, public institutions, and state-owned enterprises, channeling funds into major infrastructure, transport, energy projects, and preparations for the 2030 World Cup.

While this policy has undeniably accelerated economic recovery, it also exposes a structural limitation. A substantial portion of the necessary equipment is imported, meaning that some benefits from these investments accrue more to foreign suppliers than to the domestic productive fabric. This results in a persistent trade deficit, which continues to weigh on overall growth despite strong performances in export-oriented sectors.

+ Tourism and services drive the recovery +

One of the study’s most striking observations pertains to the very composition of this growth.

Contrary to popular belief, Morocco’s economy is not solely driven by the automotive or manufacturing industries.

Instead, the tertiary sector has emerged as the principal engine of recovery. Tourism, now nearing 20 million visitors, alongside transport, logistics, financial services, and engineering activities, accounts for the majority of value creation.

The construction sector is also experiencing robust growth, fueled by extensive infrastructure projects, while agriculture remains the primary source of economic volatility due to recurring droughts.

+ Morocco benefits from the evolving global economic landscape + 

The authors contend that the Kingdom is currently reaping the rewards of a profound transformation in the global economy.

Geopolitical tensions between China and the United States, supply chain disruptions since the Covid-19 pandemic, and new industrial diversification strategies are compelling major international corporations to seek production platforms closer to European and African markets.

In this evolving environment, Morocco’s attractiveness is significantly enhanced.

The study highlights Chinese investments in the electric battery sector, specifically Gotion High-Tech’s projects in Kénitra and CNGR’s initiatives in Jorf Lasfar, as prime examples of this new industrial momentum.

More broadly, the authors believe that the Kingdom is progressively establishing itself as a “connector state,” adept at linking value chains across Europe, Africa, and Asia, thanks to its political stability, advanced logistical infrastructure, and strategic trade agreements.

+ Economic credibility reassures investors + 

The report further emphasizes that this appeal is built upon strong macroeconomic fundamentals.

Financial stability, a gradual improvement in public finances, comfortable foreign exchange reserves, and a reduction in sovereign risk collectively bolster the confidence of foreign investors.

Furthermore, remittances from Moroccans residing abroad continue to support domestic consumption, while an improvement in terms of trade has helped mitigate the inflationary impacts of external shocks.

+ The true challenge begins now + 

However, the study adopts a far more cautious tone when discussing medium-term prospects.

According to its authors, the current growth model cannot sustainably rely on ever-increasing public investment.

They pinpoint three major limitations: mounting public debt, a progressive decline in investment returns, and the persistent difficulties faced by the private sector in taking over the growth baton.

The document specifically reveals that more capital is now required to generate the same point of growth compared to the early 2000s, indicating diminishing investment efficiency.

For the researchers, the primary weak link remains the private sector’s capacity to invest, innovate, and enhance productivity.

Access to financing remains challenging for many SMEs, competition from the informal sector continues to undermine their competitiveness, and public investments absorb a growing share of available banking resources, thereby limiting credit accessible to businesses.

This situation impedes the emergence of growth driven more by innovation, productivity gains, and private investment.

+ A fresh perspective on economic transformation + 

Finally, the report puts forth an idea worthy of consideration: For a long time, the development of emerging countries primarily hinged on industrialization.

The authors now believe that certain exportable services—including tourism, information technology, digital services, and consulting activities—can also become engines of economic transformation, provided they are strongly integrated into international value chains and generate skilled employment.

+ Morocco at its pivotal moment + 

Ultimately, this Policy Paper delivers a nuanced message. Indeed, Morocco currently benefits from a favorable international climate, characterized by geopolitical fragmentation and the reorganization of global production chains. And yes, its stability, infrastructure, and strategic positioning between Europe and Africa bolster its attractiveness.

However, these advantages alone do not constitute a comprehensive development strategy.

For the authors, the real challenge now lies in transforming this window of opportunity into sustainable growth through profound reforms across the labor market, the educational system, innovation, and the business environment.

In essence, Morocco possesses an unprecedented strategic advantage today. The question is no longer merely whether it can attract more investments, but rather whether it can successfully convert its position as a “connector” in the global economy into a genuine lever for lasting prosperity.