Why rain is critical for Morocco’s economy

Analysts hope that heavy rainfall in the south of Morocco this autumn will refill aquifers across the country that have been depleted by six years of intense drought, and improve crop yields for 2025.

The country’s agriculture sector is a major employer, and accounts for 12 percent of Morocco’s GDP, but it is volatile.

The World Bank is cautiously predicting 3.7 percent growth next year, whereas Fitch Solutions and Oxford Economics both forecast a more optimistic 5 percent.

Much of that growth however depends on rainfall reinvigorating the agricultural sector after a dry 2024. October’s deluge in the south, despite replenishing water supplies, was not all good news for farmers.

Francois Conradie, lead Africa economist at Oxford Economics, says that some farmers lost herds of sheep and cattle in the worst of the flooding and will be compensated through a special envelope included in the 2025 budget.

Data from the Humanitarian Data Exchange shows that across all of Morocco’s northern regions, rainfall so far in 2024 has been below the average for the preceding nine years.

Conradie says that overall, the year has been a dry one and that is mainly felt through the effect on the cereal harvest – wheat and barley.

Morocco’s cereal harvest was 3.1 million tonnes this year, down from 5.5 million last year, which was in line with the long-term average.

“As always the effects on the overall economy are felt through weaker final demand as farmers find themselves with less to spend,” Conradie says.

Elsewhere big exporters such as Morocco’s automotive and aerospace industries should contribute to growth.

Tourism, too, is growing apace. Sixteen million visitors came in the 11 months to the end of November 2024, 20 percent more than in the same period in 2023, the ministry of tourism says. Morocco is targeting 17.5 million visitors by 2026 and 26 million by 2030, coinciding with its role as a co-host of the Fifa World Cup.

Ali Metwally, Mena economist at the UK-based Ibis Consultancy, says that foreign direct investment surged by 50 percent in the first half of the year.

Pro-business reforms, proximity to Europe and West Africa, and growing sectors such as renewable energy, automotive, and infrastructure spending mean that Morocco “is a compelling destination for investors,” he tells AGBI.

In November, the Chinese president, Xi Jinping, stopped in Morocco on his way home from Latin America. President Macron of France also visited.

China is investing in Morocco’s EV battery and manufacturing industries, aiming to take advantage of free trade agreements with the United States and the European Union.

The Chinese company Gotion High-Tech has committed $1.3 billion to build Africa’s first EV battery “gigafactory” near Rabat, while two Chinese battery component makers, BTR New Material Group and Shinzoom, have invested $300 million and $690 million, respectively. Morocco has also formed partnerships with other African states to develop the infrastructure needed for electric vehicles.

The attractions are Morocco’s proximity to European markets, its reserves of raw materials such as phosphates for battery production, and the potential to access the African Continental Free Trade Area (AfCFTA).

US President elect Donald Trump has, however, promised to impose tariffs of 10 to 20 percent on all exporters, while the European Union also now imposes tariffs on Chinese exports of batteries.

Morocco indicators

Morocco also has the support of the big banks. The country is a “major investment destination” for the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso, the bank’s president, said in December.

In 2024 the EBRD lent more than €400 million while EBRD strategy until 2029 highlights investment in SMEs and renewable energy projects.

Morocco and the African Development Bank (AfDB) also just announced funding agreements of nearly $1 billion to cover development for the World Cup 2030, investment in economic governance and improving resilience to climate change, among other initiatives.

However, the government still has to tackle structural challenges such as high unemployment, regional inequalities and a reliance on low-value agricultural exports, Metwally warns.

Unemployment was only slightly under 14 percent in the third quarter of 2024, with the number of unemployed increasing by 58,000 to reach 1.7 million. Urban areas face a particularly severe situation, with unemployment at 17 percent, while rural regions report seven percent.

“Reforms in labour markets, education and fiscal policy are critical, along with continued investment in infrastructure and renewable energy,” Metwally says.

Tags: crop, Morocco, agriculture sector, cereal, harvest, barley, rainfall, wheat, yields, Sheep, cattle