Morocco is a country that has practically everything to enjoy economic development that allows it to gradually reduce the gap with Spain and Europe. A good geographical location (next to Europe, one of the major consumer centers), a cheap workforce, but relatively better trained than that of the rest of Africa, and great allies at an international level such as the US or Spain itself. Rabat does not want to waste this opportunity and has begun to partially follow the steps that Spain took in its time of greatest GDP and productivity growth. Morocco is becoming an automobile power that could catapult its GDP growth in the coming years, according to different analysis houses.
To date, Morocco’s economy has been more of a disappointment than a positive surprise. Its aggregate and per capita GDP growth rates have been relatively small for its level of development and all the advantages noted above, in addition to the international aid it receives. Furthermore, recently, evidence of a slowdown has emerged. However, this could be about to start changing. “Morocco’s weak economic performance This year it will probably be nothing more than a mere setback,” James Swanston, an analyst at Capital Economics, points out in a recent report. This setback is explained by Stéphane Alby, an economist at BNP Paribas, in a major drought that has reduced agriculture. In fact, If the sector is excluded, the French bank expert clarifies, activity growth remained sustained at 3.3% year-on-year in the first half of 2024.
The horizon, therefore, remains promising. “Thanks to low and stable inflation, looser monetary policy and a flourishing manufacturing sectorwe expect Morocco’s economy to grow around 5% in 2025 and 2026, faster than other analysts expect. What’s more, over a longer horizon, income convergence with the United States is likely to be one of the fastest in the emerging world,” says Swanston from Capital Economics.
Morocco’s current per capita income is about $4,200, far from that of countries like Spain, which exceeds $30,000, according to the International Monetary Fund (IMF). However, although the gap is so large, a good part of this difference was generated between the 1950s and 1980s, when Spain enjoyed its great industrial and productivity boom. A recent report from Deutsche Bank showed that the great takeoff of the Spanish economy occurred in the period 1950-1974, with an average growth each year of 6.3%. Later, the national economy began to lose traction, as did productivity. In the period 1975-1999 the real annual variation rate of GDP averaged 2.6%, while in the quarter of a century 2000-2024 this figure was only 1.6%. Now Morocco wants to emulate that stage or great economic cycle of Spain by following the same steps.
Morocco looks to Spain for its jump
Precisely at that time, Spain saw significant foreign investment arrive, with special mention to the automobile sector. Many of the best-known plants of foreign brands on Spanish soil began operating at that time. In the 1950s, the French state company Renault was looking for an industrial partner to manufacture vehicles in Spain under its license and from there the FASA plant in Valladolid emerged. The well-known Volkswagen plant in Pamplona worked for the English company Morris (the famous Mini) in the 60s and 70s SEAT used it for Italian Lancia units. In 1972, the American Ford decided to return to Spain after decades of absence and presented its plans to the Franco government, which would lead to the construction of the Almussafes plant in Valencia. A few years later, in 1979, the Japanese company Nissan settled in Catalonia.
This dynamic is being appreciated in recent times in Morocco. Although, for example, Renault has been present in the country since the 1930s, the acceleration has come in the 21st century. The French group’s plants in Casablanca (SOMACA) and Tangier have exceeded four million vehicles manufactured on their production lines since the start of operations, in 2005 and 2012 respectively. Another French giant, Citröen, plans to produce around 100,000 vehicles in the country by 2027. Last year, total vehicle production in Morocco increased by 15% and surpassed the 500,000-unit mark. Morocco now produces more vehicles than Hungary and Romania, and is closing in on Polandaccording to figures compiled by Capital Economics.
After the pandemic, projects have multiplied, especially in the heat of the push for electric cars and the need to diversify supply chains and find lower labor costs. A China eager to flood the world with its cheapest and most competitive electric vehicles has had a lot to do with this drive. Something that has been seen very clearly in the components. More and more Chinese manufacturers of batteries for electric cars are planning plants in Morocco. Chinese battery group Gotion High-Tech will open a gigafactory in the country. The Hunan Zhongke Shinzoom Technology company, specialized in electromagnetic equipment and battery anodes, too. The BTR New Material group also plans to build a factory to produce 50,000 tons of cathodes per year. In an even more significant example, the Spanish automotive components manufacturer Antolin, which already has a plant in Tangier, has announced that it wants to increase its investments in the neighboring country.
Françoi Conradie, economist at Oxford Economics, explains in statements to elEconomista.es that The comparison with Spain in the 60s and 70s is logical and makes sense.: “Yes, the same logic applies: trying to make the most of a skilled and relatively cheap workforce that is outside, but close to, the core European market. The timing is very good, as the adoption of electric vehicles in Europe will keep the demand for car purchases at a healthy level,” says this expert.
Although the impulse comes from before, from BNP, Stéphane Alby goes back to 2021, when the authorities launched a broad long-term program that aims to profoundly remodel Morocco’s development model. The figures seem to support these plans: announcements of completely new foreign direct investment (FDI) projects have multiplied by five in the last two years. Morocco is the country with the highest proportion of new projects announced as a percentage of GDP compared to other “connector” countries: 14% in 2023 compared to less than 2% for Mexico and Türkiye. Here the importance of China is once again evident: historically it represented less than 2% of FDI flows, but it represented almost 30% of investment announcements in the period 2022-2023.
James Swanston, the author of the Capital Economics report, explains in statements to elEconomista.es that Morocco can make great progress in improving its GDP per capita, although it will not reach the richest countries in Africa in the short and medium term (they have great natural wealth such as oil or diamonds), “should experience a much faster rate of GDP per capita growth in the medium and long term and converge with the income of developed economies more quickly than other African nations,” says this expert. All in all, “we hope that Moroccan exports will continue to grow strongly, supported by the automobile sector. We have already noted previously that the automobile sector has advanced by leaps and bounds in the last decade,” he assures.
Other advantages of producing in Morocco
“Morocco has just experienced profound changes with the development of the automobile sector. Exports from this sector have more than tripled in a decade, significantly improving the economy’s ability to withstand external shocks without increasing its growth potential. Strengthening the links between the development of these industrial niches with high added value and the rest of the economy will, therefore, be one of the main challenges of the coming years,” completes Alby from BNP.
The data provided by experts from the different analysis houses paves the way the ground for Morocco to enjoy its economic miracle or stage of great expansion. Beyond the sector-specific economic advantages, Morocco is likely to remain an attractive investment destination. The quality of Morocco’s infrastructure provides a good environment for exportand Morocco ranks sixth among major emerging markets in terms of the quality of its ports. Meanwhile, more than half of the population is under 30 years old and the working-age population will continue to grow as a percentage of the total population. This should generate greater domestic savings and, therefore, more domestic resources to finance investment.
“With a growing trend of investment in Morocco from the EU, Gulf economies and China in recent years, we suspect that these factors, together with Morocco’s abundant resources, structural reforms and foray into Africa’s supply chain , will make Morocco continue to be a destination for investment. This should further consolidate Morocco as a manufacturing center in North Africa,” states the Capital Economics report.
LinkedinBeloud
#Morocco #imitates #model #Spain #great #economic #leap #factory #Africa
