Economy Geopolitical tensions and low rain may stifle Morocco’s GDP growth By Nadim Kawach January 16, 2025, 1:07 PM Unsplash/Bradley Pritchard Jones Morocco's rainfall in December was down 60 percent and if dry conditions persist, GDP growth could suffer Morocco GDP growth up to 3.5% Worries over low rainfall Regional tensions remain a factor Morocco’s economy is expected to pick up in the first quarter of 2025, thanks to increased consumer spending, but the momentum faces a risk as a result of geopolitical tensions and low levels of rainfall, a government agency has said. The country’s GDP grew by around 4.3 percent in the third quarter of 2024 compared with an average 2.4 percent in the first two quarters of last year, according to figures from the government High Commission for Planning. In a report published on its website this week, the Commission said growth in the fourth quarter was expected to be around 3 percent and is projected to accelerate to 3.5 percent in the first quarter of 2025. “Growth in the national economy remains surrounded with unconfirmed factors in the short term as global economic conditions are beset with a number of challenges due to the continuation of geopolitical tensions in the Middle East and Europe,” the Commission said. The report said such factors could lead to stronger inflationary pressure and that this should prompt the Moroccan government to take measures to support purchasing power. “Additionally the national economy faces an important negative factor in the first quarter of 2025 relating to climatic conditions in winter,” the report said. Rainfall since the start of the farming season until December has declined by 61 percent. If dry conditions persist in the first quarter, Morocco’s projected GDP growth would lose 1 percent or more, the report said. According to the report, growth in the first quarter of 2025 should be supported by stronger household purchasing ability arising from a government decision to cut taxes and an expected slowdown in inflation. The report said it expects household consumer spending to have increased by around 3.2 percent in the fourth quarter of 2024 and a projected 3.4 percent in the first three months of 2025. In December, the Moroccan government unveiled significant tax reforms as part of its 2025 budget, aiming to ease the burden on individuals and businesses while enhancing transparency and administrative efficiency. Why rain is critical for Morocco’s economy Morocco aims for 80m airport capacity by 2030 Inflation, not war, is Gulf states’ top concern, says WEF The General Directorate of Taxes detailed the measures in a summary released before the end of 2024, highlighting adjustments to corporate tax, personal income tax, VAT and other fiscal policies. A major reform aims to reduce the tax burden for individuals. Changes include raising the income tax exemption threshold from 30,000 to 40,000 dirhams ($3,000-$4,000), revising tax brackets to lower rates, and reducing the marginal tax rate from 38 percent to 37 percent. Other measures that could be a catalyst for GDP growth have focused on increasing deductions for family-related expenses and introducing exemptions for pensions, which will be implemented by 2026. Taxpayers with property income can now opt for a flat 20 percent tax rate, eliminating the need for annual declarations.