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COUNTRY PERSPECTIVES - MOROCCO
Country presentation

A Mediterranean country that also borders the Atlantic, the Kingdom of Morocco is the most western country in North Africa, with a western coastline along the Atlantic Ocean that turns at the Straits of Gibraltar and continues along the Mediterranean Sea. Its eastern border is with Algeria and a relatively narrow body of water separates it from Spain to the north.

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Introduction

Over the past decade, Morocco has embarked on an ambitious programme of structural reforms in several fields (cf. good performances attested by the report Doing Business), aiming to further liberalise its markets and enhance the competitiveness of its economy.

This policy aims to help the Moroccan economy reach more sustainable growth, improve living conditions, and reduce social and regional disparities. Morocco has achieved significant progress as regards democratisation of public life, education and health, and strengthening of basic infrastructure. All these advances have contributed to greater social and political stability. However, growth in Morocco’s economy remains volatile, heavily dependent on agriculture, which in turn is at the mercy of weather conditions.

Morocco enjoyed higher economic growth of 4.5 percent between 2001 and 2004, but this is far from the level needed to fight poverty. The growth rate slipped to 1.7 percent in 2005 (compared to 3 percent in budget projections), affected by severe drought conditions (reflecting the economy’s great vulnerability to weather conditions), the slow transition of using national savings for productive investments (including those generated by transfer of funds from abroad) and Moroccan companies’ relatively weak competitiveness in the world economy despite the small/medium business modernisation programme. However, recovery is expected in 2006 (the latest estimates say around 7%), partly explained by exceptionally high agricultural output.

Morocco's largest industry is phosphate mining, the second largest source of income is remittances from nationals living abroad, and the third is revenue from tourism.

Morocco’s largest employer is the primary sector, with 45 percent of the labour force and 60 percent of the female labour force. Agriculture represents between 12 and 17 percent of GDP, with variations from year to year, particularly vulnerable when rainfall is low. The secondary sector accounts for 30 percent of GDP, dominated by extraction and transformation of phosphates, which represent more than 17 percent of world production. The services sector is the largest sector in terms of contribution to real GDP (around 38 percent). Manufacturing is dominated by chemical and related industries, food, textiles, clothing, and leather goods, with an 18 percent share of GDP.

Long-term trends for Moroccan trade indicate increasingly open foreign trade, up from 41 percent in 1977 to 52 percent in 2002. In 2004, imports reached US$ 17.822 billion and exports US$ 9.925 billion. Exports from Morocco are dominated by three groups of products, representing nearly 79 percent of total sales: consumer goods (more than 80 percent being textile products), semi-finished products (phosphoric acid, natural and chemical manure, beverages) and foodstuffs. Sale of gross products (11.6 percent of total exports) involves primarily phosphates. Nearly 85 percent of the country’s imports involve semi-finished products, consumer goods, equipment, and energy-generating products. The EU is Morocco’s primary trading partner, providing 65 percent of Morocco’s imports (EUR 9.6 billion) and receiving 70 percent of Morocco’s exports (EUR 6 billion). France is by far the Kingdom’s number one trading partner (23.5 percent of overall trade), followed by Spain (12.9 percent), Italy (5.7 percent), Germany (4.1 percent), the United Kingdom (3.7 percent) and the United States (4.1 percent).


 
Challenges

The Moroccan economy remains heavily dependent on agriculture (20 percent of GDP, 40 percent of employment), and thus highly sensitive to weather conditions. Unemployment is high, and the labour force is growing considerably (3 percent), with increasingly broad participation by women in the labour force. Large segments of the population are still socially and economically marginalised, with some 15 percent of the population considered poor. In spite of the progress recorded over the past few years, current economic dynamics are insufficient to maintain employment and meet these challenges. A National Initiative for the Human Development (NIHD) was launched in May 2005, aiming at reducing the social and geographical disparities, developing employment and income, and helping vulnerable populations by means of a participative and transparent process. The total cost of the Initiative over the period 2006-2010 is estimated at 10 billion dirhams (2 percent of the GDP). The rate of unemployment dropped significantly in 2006 to 9.7 percent at national level, vs. 11.1 percent in 2005, according to the High Planning Commission (HCP). This rate declined to 15.5 percent in urban area (18.4 percent in 2005) and 3.7 percent in rural area (3.6 percent in 2005).

 
Strong points

Among Morocco’s assets, the low cost and the high quality of labour, the country practises a policy of structural reforms which attract the interest of the investors.

Its political, economic, geographical and financial proximity of the European Union contributes to the dynamism of the economy. Its political stability and its democratic evolution ensure to him the support of the international community.

An offshore financial market was instituted by the Dahir N 1-91-131 carrying promulgation of law N 58-90. This market is opened to banks and holding companies authorised to settle in the country.

The country has some attractive sectors: agrifood, fishing, phosphate, electronics, automotive and aeronautical sub-contracting, textile, clothing and leathers building and public works, tourism, telecommunications, trade, transport. Morocco made great progress in the aeronautical sub-contracting and near-shoring (close relocation), becoming the first offshore destination for the French-speaking market.

The country developed welcoming infrastructure for FDI such as industrial parks, technoparks and free zones for exports and logistics, economic activities zones and company headquarters.
 
References

Capital Rabat
Surface area 710,000 km2 (incl. Western Sahara)
Population 30,666,000 inhabitants (2006)
Languages Arabic, Berber, French, Spanish
GNP (dollars) US$ 65.93 (Ministry of Finance, 2006)
GNP/per capita (dollars) US$ 2,152 (Ministry of Finance, 2006)
Currency Moroccan Dirham (MAD)
1 Euro = 11.23 MAD - 1US$ = 8.4 MAD
Religion Islam (98.7 % Muslims); Christian (1.1%) and Jewish (0.2%) minorities
National holiday 30th July (Fête du Trône), 18th November (Independence Day)
Association Agreement with EU

Signed on 26/02/1996; implemented since 1st March 2000
EU web site:
http://www.delmar.cec.eu.int

WTO membership Member since 1/1/1995
 
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