Economy of Morocco
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Economy - overview: Morocco faces the problems typical of developing countries - restraining government spending, reducing constraints on private activity and foreign trade, and achieving sustainable economic growth. Since the early 1980s the government has pursued an economic program toward these objectives with the support of the International Monetary Fund, the World Bank, and the Paris Club of creditors. The country's currency, the dirham, is now fully convertible for current account transactions; reforms of the financial sector have been implemented; and state enterprises are being privatized. Drought conditions depressed activity in the key agricultural sector, and contributed to an economic slowdown in 1999. Favourable rainfalls have led Morocco to predict a growth of 6% for 2000. Formidable long-term challenges include: servicing the external debt; preparing the economy for freer trade with the EU; and improving education and attracting foreign investment to improve living standards and job prospects for Morocco's youthful population.
Macroeconomic stability coupled with relatively slow economic growth characterize the Moroccan economy over the past several years. The present Youssoufi government has introduced a number of important economic reforms over the past several years. The economy, however, remains overly dependent on the agriculture sector. Morocco's primary economic challenge is to accelerate growth in order to reduce high levels of unemployment.
Through a foreign exchange rate anchor and well-managed monetary policy, Morocco has held inflation rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2%. Despite criticism among exporters that the dirham has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves are strong, with more than $7 billion in reserves at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco the capacity to service its debt. Current external debt stands at about $19 billion.
Economic growth, however, has been erratic and relatively slow, partially as a result of an over-reliance on the agriculture sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 13% to 20% of GDP. Given that almost 50% of Morocco's population depends directly on agriculture production, droughts have a severe knock-on effect to the economy. Two successive years of drought led to a 0.7% decline in real GDP in 1999 and stagnation in 2000. Better rains during the 2000-01 growing season led to an estimated 6% growth rate in 2001. Over the long term, Morocco will have to diversify its economy away from agriculture to develop a more stable economic basis for growth.
The strongest point of Moroccan industry is phosphate mining. Morocco houses approximately 2/3 of the world's phosphate reserves, put it in a higher league than its major competitors, China, Russia, and the United States. Although it employs only 2% of the population, phosphate mining is responsible for half of the nation's income.
The current government has introduced a series of structural reforms in recent years. The most promising reforms have been in the liberalization of the telecommunications sector. This process started with the sale of a second GSM license in 1999. In 2001, the process continued with the privatization of 35% of the state operator Maroc Telecom. Morocco has announced plans to sell two fixed licenses in 2002. Morocco also has liberalized rules for oil and gas exploration and has granted concessions for many public services in major cities. The tender process in Morocco is becoming increasingly transparent. Many believe, however, that the process of economic reform must be accelerated in order to reduce urban unemployment below the current rates above 20%.
Morocco has signed Free Trade Agreements with the United States of America and the European Union. The agreement with the United States has been ratified on July 22, 2004 in the United States Senate, by a vote of 85 to 13, while the agreement with the EU is to take effect by 2010.
Levels and flows
GDP: purchasing power parity - $108 billion (1999 est.)
GDP - real growth rate: 0% (1999 est.)
GDP - per capita: purchasing power parity - $3,600 (1999 est.)
GDP - composition by sector:
agriculture:
16%
industry:
30%
services:
54% (1998 est.)
Population below poverty line: 13.1% (1990-91 est.)
Household income or consumption by percentage share:
lowest 10%:
2.8%
highest 10%:
30.5% (1990-91)
Inflation rate (consumer prices): 1.9% (1999 est.)
Labour force: 11 million (1997 est.)
Labour force - by occupation: agriculture 50%, services 35%, industry 15% (1999 est.)
Unemployment rate: 19% (1998 est.)
Budget:
revenues:
$9.1 billion
expenditures:
$10 billion, including capital expenditures of $1.7 billion (FY98/99 est.)
Industries: phosphate rock mining and processing, food processing, leather goods, textiles, construction, tourism
Industrial production growth rate: 2% (1998 est.)
Electricity - production: 13,160 GWh (1998)
Electricity - production by source:
fossil fuel:
83.59%
hydro:
16.41%
nuclear:
0%
other:
0% (1998)
Electricity - consumption: 12,363 GWh (1998)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 124 GWh (1998)
Agriculture - products: barley, wheat, citrus, wine, vegetables, olives; livestock
Exports: $7.1 billion (f.o.b., 1998)
Exports - commodities: phosphates and fertilizers, food and beverages, minerals (1998)
Exports - partners: France 27%, Spain 11%, India 7%, Japan 6%, Italy 5% (1998)
Imports: $9.5 billion (f.o.b., 1998)
Imports - commodities: semi-processed goods, machinery and equipment, food and beverages, consumer goods, fuel (1998)
Imports - partners: France 22%, Spain 10%, US 7%, Germany 6%, Italy 6% (1998)
Debt - external: $19.1 billion (1999 est.)
Economic aid - recipient: $565.6 million (1995)
Currency: 1 Moroccan dirham (DH) = 100 centimes
Exchange rates: Moroccan dirhams (DH) per US$1 - 10.051 (January 2000), 9.804 (1999), 9.604 (1998), 9.527 (1997), 8.716 (1996), 8.540 (1995)
Fiscal year: July 1 - June 30
See also
- [Description of the US-Moroccan FTA (http://www.moroccousafta.com/index_ang.htm)]
- [Final Text of the US-Moroccan FTA (http://www.moroccousafta.com/ftafulltext.htm)]
- [Description of benefits of the US-Moroccan FTA (http://www.moroccanamericantrade.com/FTAsummEn.pdf)]
- [Moroccan-American Trade and Investment Council (http://www.moroccanamericantrade.com/)]
- Morocco
- Economy of Africa
- Bank Al-Maghrib - Central bank of Morocco