Morocco's domestic demand grew by 5.4% in Q4 2024
The Moroccan economy experienced a 5.4% growth in its domestic demand during the fourth quarter of 2024, contributing 6.2% to the overall economic growth according to the latest update of the High Planning Commission (HCP).
Households were a key focus, with household consumption registering an annual increase of 3.2%, adding two percentage points to GDP growth. Although rural incomes fell due to the drought, other factors maintained household purchasing power.
These included general price stability, higher wages for public sector workers, social support programmes and renewed access to consumer credit.
At the household level, the strongest consumption was the demand for finished goods, especially vehicles, which led to a 58.1% increase in imports in the automobile market at the end of the year.
Private and public sector
Public spending also increased during the period, with government consumption growing by 3.9%, 0.1% higher than in the same quarter of 2024. This increase is mostly due to spending on administrative operations.
Growth in the public sector was driven by infrastructure projects, including water resources development and preparations for this year's Africa Cup of Nations and the football World Cup, which is scheduled for 2030.
In contrast to public spending, the private sector adjusted to slower export activity, but still contributed to the overall expansion. Although private saving improved slightly, the pace of investment growth outpaced these gains, leading to a larger budget deficit and a rise in corporate debt.
Gross investment grew by 9.8% compared to the previous year, adding 3.5% points to economic growth. This was supported by an increase in foreign direct investment and imports of industrial equipment.
Private enterprises are likely to reduce their investment activities due to low external demand growth and rising wage costs, while public investment in infrastructure, sporting events and water desalination projects will remain strong. Thus, the HCP projects that gross investment will grow by 8.8% in the first quarter of 2025.
Regarding the above, higher external financing needs, driven by domestic demand growth, accounted for 3.8% of GDP in the third quarter of 2024.
This increase depends on the agricultural sector, as rainfall is expected to return to near-normal seasonal levels during the winter. And, on the other hand, the HCP expects non-agricultural activities to 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 related to its dependence on the agricultural sector and climate vulnerability. In addition, youth unemployment and economic inequality are also a major issue for the country's economy.
Agriculture accounts for approximately 15% of the country's GDP and in recent years, due to drought, agricultural production has suffered. For this reason, Morocco has implemented a national climate change policy to mitigate vulnerability.
Another challenge is youth unemployment (15-24 years old), as in the second quarter of 2024, the rate reached 48.8%, which was 2.7% higher 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.
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In addition, Morocco is addressing wage inequality through a 5% increase in the minimum wage in the private sector starting on 1 January 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 to be supported by looser monetary policy and the implementation of fiscal and social measures to strengthen household purchasing power. Moreover, annual growth is projected to reach 4.8%, which is one point higher than during the same period last year.