Economy of Morocco

Economy of Morocco
Currency	Moroccan Dirham (MAD)
Fiscal year	Calendar year
Trade organisations	WTO,GAFTA
Statistics
GDP (PPP)	$127.31 billion (2007) [1]
GDP growth	6.3% (2008) [2]
GDP per capita	$4,094(2007) [3]
GDP by sector	Agriculture: 13.3%, industry: 31.2%, services: 55.5% (2006 est.)
Inflation (CPI)	2.8% (2006 est.) [4]
Population below poverty line	15% (2008)
Labour force	11.39 million (2008) [5]
Labour force by occupation	Agriculture: 40%, Industry: 15%, Services: 45% (2003)[6]
Unemployment	7.7% [7]
Main industries	Phosphates, rock mining and processing, food processing, fishing, leather goods, textiles, construction,tourism
External
Exports	$11,72 billion f.o.b. (2006)
Export goods	Clothing, fish, inorganic chemicals, transistors, crude minerals, fertilizers (including phosphates), petroleum products, fruits, vegetables.
Main export partners	France 21.4%, Spain 20.5%, UK 4.9%, Italy 4.7%, India 4.1% (2006)
Imports	$21.22 billion f.o.b. (2006 est.)
Import goods	Crude petroleum, textile fabric, telecommunications equipment, wheat, gas and electricity, transistors, plastics.
Main import partners	France 17.4%, Spain 13.4%, Saudi Arabia 6.9%, China 6.8%, Italy 6.3%, Germany 5.9% (2006)
Public finances
Public debt	67,4% of GDP (2006 est.)
Revenues	$16.45 billion (2006 est.)
Expenses	$18.98 billion (2006 est.)
Economic aid	$706 million (2005)
Main data source: CIA World Factbook All values, unless otherwise stated, are in US dollars

Morocco's economy is considered a relatively liberal economy governed by the law of supply and demand. Since 1993, the country has followed a policy of privatization of certain economic sectors which used to be in the hands of the government.^[1]

The economic system of the country presents several facets. It is characterized by a large opening towards the outside world. France remains the primary trade partner (supplier and customer) of Morocco. France is also the primary creditor and foreign investor in Morocco. In the Arab world, Morocco has the second-largest non-oil GDP, behind Egypt, as of 2005.

Among the various free trade agreements that Morocco has ratified with its principal economic partners, are The Euro-Mediterranean free trade area agreement with the European Union with the objective of integrating the European Free Trade Association at the horizons of 2012; the Agadir Agreement, signed with Egypt, Jordan, and Tunisia, within the framework of the installation of the Arab Zone of Free Exchange; the US-Morocco Free Trade Agreement with United States which came into force in January 1 2006 and lately the agreement of free exchange with Turkey. (See section below)

Contents 1 Macro-economic trend 2 Economic History (1960-recent) 3 Recent Developments 4 Agriculture 5 Industry 6 Services 7 External trade 8 Investment 9 Moroccan companies and industrial sectors 10 Developement of the Northern Region 11 Infrastructure 12 Unemployment 13 Handicaps 14 See also 15 Notes 16 External links

Macro-economic trend

Morocco is a fairly stable economy with continuous growth over the past half-a-century. Current GDP per capita grew 47% in the Sixties reaching a peak growth of 274% in the Seventies. However this proved unsustainable and growth scaled back sharply to just 8.2% in the Eighties and 8.9% in the Nineties.

This is a chart of trend of gross domestic product of Morocco at market prices estimated by the International Monetary Fund with figures in millions of Moroccan dirhams.

Year	Gross Domestic Product	US Dollar Exchange	Inflation Index (2000=100)
1980	74,090	3.93 Dirhams	33
1985	129,507	10.06 Dirhams	53
1990	212,819	8.24 Dirhams	67
1995	281,702	8.54 Dirhams	91
2000	354,208	10.62 Dirhams	100
2005	460,855	8.86 Dirhams	107
2006	503,714	8.72 Dirhams	72

For purchasing power parity comparisons, the US Dollar is exchanged at over 8 Dirhams. Average wages in 2007 hover around $11-14 per day.

Economic History (1960-recent)

Morocco instituted a series of development plans to modernize the economy and increase production during the 1960s. Net investment under the five-year plan for 1960–64 was about $1.3 billion. The plan called for a growth rate of 6.2%, but by 1964 the growth rate had only reached only 3%. A new three-year plan (1965–67) targeted an annual growth rate of 3.7%. The main emphasis of the plan was on the development and modernization of the agricultural sector. The five-year development plan for 1968–72 called for increased agriculture and irrigation. The development of the tourist industry also figured prominently in the plan. The objective was to attain an annual 5% growth rate in GDP; the real growth rate actually exceeded 6%.

Investment during the 1970s included industry and tourism development. The five-year plan for 1973–77 envisaged a real economic growth of 7.5% annually. Industries singled out for development included chemicals (especially phosphoric acid), phosphate production, paper products, and metal fabrication. Tourist development was also stressed. In 1975, King Hassan II announced a 50% increase in investment targets to allow for the effects of inflation. The 1978–80 plan was one of stabilization and retrenchment, designed to improve Morocco's balance-of payments position, but the 4% annual growth rate achieved was disappointing.

The ambitious five-year plan for 1981–85, estimated to cost more than $18 billion, aimed at achieving a growth rate of 6.5% annually. The plan's principal priority was to create some 900,000 new jobs and to train managers and workers in modern agricultural and industrial techniques. Other major goals were to increase production in agriculture and fisheries to make the country self-sufficient in food, and to develop energy (by building more hydroelectric installations and by finding more petroleum and other fossil fuels), industry, and tourism to enable Morocco to lessen its dependence on foreign loans. The plan called for significant expansion of irrigated land, for increased public works projects such as hospitals and schools, and for economic decentralization and regional development through the construction of 25 new industrial parks outside the crowded Casablanca-Kénitra coastal area. Proposed infrastructural improvements included the $2-billion rail line from Marrakech to El Aaiún; a new fishing port at Ad-Dakhla, near Argoub in the Western Sahara; and a bridge-tunnel complex across the Strait of Gibraltar to link Morocco directly with Spain. Large industrial projects included phosphoric acid plants, sugar refineries, mines to exploit cobalt, coal, silver, lead, and copper deposits, and oil-shale development.^[2]

Since the early 1980s the Moroccan government has pursued an economic program toward accelerating real economy growth 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 a growth of 6% for 2000. Formidable long-term challenges included: 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 period 2000-2005. The government introduced a number of important economic reforms in that period. The economy, however, remained overly dependent on the agriculture sector. Morocco's primary economic challenge was to accelerate growth in order to reduce high levels of unemployment.

External debt stood at around $19 billion in 2002, but the country had strong foreign exchange reserves and active external debt management, which was allowing it to service its debts. The government continued liberalizing the telecommunications sector in 2002, as well as the rules for oil and gas exploration. This process started with the sale of a second GSM license in 1999. The government in 2003 was using revenue from privatizations to finance increased spending. Although Morocco's economy grew in the early 2000s, it was not enough to significantly reduce poverty.^[3]

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 were 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 $16.6 billion. [8]

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 36% 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 1% incline in real GDP in 1999 and stagnation in 2000. Better rains during the 2000 to 2001 growing season led to an 6,5 % growth rate in 2001. Growth in 2006 went above 9%, this was achieved by a booming real-estate market.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 near Khouribga and in Western Sahara. Morocco controls approximately two thirds of the world's phosphate reserves, placing it in a higher league than its major competitors, the People's Republic of 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 government introduced a series of structural reforms in recent years. The most promising reforms have been in the liberalization of the telecommunications sector. 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.

Recent Developments

In a statement released on july 2008, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn called Morocco "a pillar of development in the region" and congratulated King Mohammed VI and the Central Bank on Morocco's continued strong economic progress and effective management of monetary policy.^[4]

Morocco's economy is expected to grow by 6.2% in 2008, according to Salaheddine Mezouar, the Morrocan finance minister. While the forecast is slightly lower than the earlier 6.8% projected growth Mezouar said "it still remains quite an achievement considering the circumstances". GDP growth in 2007 was only 2.2% due to a poor harvest caused by prolonged periods of drought. Inflation is expected to reach 2.9% in 2008 due to the rising costs of energy.^[5] In of an increasingly challenging global economic climate, Morocco experienced nonagricultural GDP growth of 6.6 percent in 2007, and the IMF expects continued nonagricultural expansion of the Moroccan economy.

The global financial crisis affected the Moroccan economy in only a limited way. Morocco may be affected, by the slowdown of international economy, stirred by the global financial crisis, and whose maximum impact on national economy could "decrease the GDP growth rate by at least one point in 2009," said governor of Bank Al Maghreb (Morocco's central bank), Abdellatif Jouahri.^[6]

In a report issued on july 2008, the IMF noted that Morocco's financial sector is "sound and resilient to shocks," and that the "remarkable fiscal consolidation efforts of recent years" have allowed the Moroccan economy to absorb the impact of difficult international economic conditions and increasing global prices for essential commodities such as petroleum and energy.

International economic experts recognize that Morocco's exemplary economic performance is beneficial not only to Moroccans, but also for the nearly 90 million people who live in North Africa, a region also known as the Maghreb.

Ambassador Stuart Eizenstat, former US Ambassador to the EU and Deputy Secretary of the Treasury of the US during the Clinton Administration said: "Morocco stands out as a model of economic reform for the region and for other developing countries. The kind of economic progress that Morocco has made, and which the rest of the Maghreb has the potential to accomplish, is the best antidote to the new threat of terrorism in the region,".

Real GDP growth is expected to average 5.5% in 2009-13, seen the prospects in the tourism and the non-agricultural industry , slightly below the average rate in 2004-08, as demand growth in the euro area—Morocco's key export market and source of tourists—is projected to be more subdued. Growth will be well below the 8-10% levels that are widely regarded as necessary to have a major impact on poverty and unemployment. Economic growth will also be intermittently hindered by the impact of periodic droughts on the rain-fed agricultural sector, the country's largest employer.^[7]

Moroccan GDP growth (IMF)	2004	2005	2006	2007	2008	2009
Percentage of GDP growth	4.8%	3.0%	7.8%	2.7%	6.5% (est.)	5.7% (est.)

Agriculture

Moroccan agricultural production consists of orange, tomatoes, potatoes, olives, and olive oil. High quality agricultural products are usually exported to Europe. Morocco produces enough food for domestic consumption except for grains, sugar, coffee and tea. More than 40% of Morocco's consumption of grains and flour is imported from the United States and France.

Agriculture industry in Morocco enjoys a complete tax exemption. Many Moroccan critics say that rich farmers and large agricultural companies are taking too much benefit of not paying the taxes, and that poor farmers are struggling with high costs and are getting very poor support from the state.

Morocco consistently ranks among the world's largest producers and exporters of cannabis, and its cultivation and sale provide the economic base for much of northern Morocco. The cannabis is typically processed into hashish. This activity represents 0.57% of Morocco's Gross Domestic Product (GDP). A UN survey in 2003 estimated cannabis cultivation at about 1340 km² in Morocco's five northern provinces. This represented 10% of the total area and 23% of the arable lands of the surveyed territory and 1% of Morocco's total arable land^[8]. Morocco is a party to the 1988 UN Drug Convention and in 1992 Morocco passed legislation designed to implement it and its new national strategy against drugs formulated by its National Committee on Narcotics was adopted in 2005. That same year, the International Narcotics Control Board commended the Government of Morocco for its efforts to eradicate cannabis plant cultivation on its territory, which has resulted in the total potential production of cannabis resin in the Rif region decreasing by 10 per cent over the previous year. At the same time the board called upon the international community to support its efforts where possible^[9].

The country is the largest fish market in Africa, with an estimated total catch of 1,084,638 MT in 2001. A new four-year fishery agreement with the European Union will allow European vessels, mostly from Spain, to operate in Moroccan and Western Saharan waters in exchange for an economic compensation programme, which the National Fishery Office of Morocco intends to use to boost modernisation of its domestic fishery sector. ^[10] There have been constant disputes with Spain over fishing rights since 1973 when Morocco declared a Exclusive Economic Zone (EEZ), resulting on a 70-nautical-mile (130 km) coastal fishing limit. This was extended to 200 nautical miles (370 km) in 1981^[11]. This "fish war" with Spain and the EU made daily headlines in Morocco.

It is also the largest almond producer in Africa, amounting to 1.7% of the world production, about 6,000 tonnes in kernels, marketed only for the domestic market.^[12]

Industry

In 2000, industry accounted for one-third of GDP, and industrial output rose 3.5%. Leading industrial sectors in 2002 were phosphate rock mining and processing, food processing, leather goods, textiles, and construction. Morocco holds the world's largest phosphate reserves. Phosphate is mainly found in the west region of the country. Light industries provide 16% of Morocco's GDP and employ about one million people.

The manufacturing sector produces light consumer goods, especially foodstuffs, beverages, textiles, matches, and metal and leather products. Heavy industry is largely limited to petroleum refining, chemical fertilizers, automobile and tractor assembly, foundry work, asphalt, and cement. Many of the processed agricultural products and consumer goods are primarily for local consumption, but Morocco exports canned fish and fruit, wine, leather goods, and textiles, as well as such traditional Moroccan handicrafts as carpets and brass, copper, silver, and wood implements.

Textiles form a major industry in Morocco. The European Union is Morocco's top client as regards textile and clothing, with France importing 46 % of hosiery, 28.5 % of basic textile and 27.6 % of ready-to-wear clothing from Morocco, managing director of the Moroccan Export Development Center underlined.^[13]Recalling that Morocco's textile and clothing exports totaled some $ 3.7 bln in 2007, Saad Benabdallah ascribed this performance to the many assets that Morocco enjoys, namely, geographical proximity, flexibility, sourcing skills and the multiple opportunities offered by Free Trade Agreements sealed with several countries, including the EU, the US and Turkey.

There are two oil refineries, one at Mohammedia and one at Sidi Kacem, with a total refining capacity of 155,000 barrels per day. There are also several petrochemical plants, a polyvinyl chloride factory, and many phosphate-processing plants. The Maghreb-EU pipeline has been operating since 1996. There are four plants assembling cars and small utility vehicles: Renault Moroc, Sopriam, Somaca, and Smeia. A number of cement factories are also in operation. The Safi industrial complex, opened in 1965, processes phosphates from Youssoufia, pyrrhotites from Kettara, and ammonia.

Ownership in the manufacturing sector is largely private, but the government owns the phosphate-chemical fertilizer industry and much of the sugar-milling capacity, through either partnership or joint financing. It is also a major participant in the car and truck assembly industry and in tire manufacturing.

Morocco is the largest silver market in Africa and third largest exporter of phosphate in the world after U.S. and China. Casablanca is Morocco's leading industrial centre with 39% of the country’s production units and 60% of industrial labor. Through investment Tangier is becoming a considerable centre of industry as well.

Services

• Tourism

Morocco is a major touristic destination. Tourism is thus a major contributor to both the economic output and the current account balance, as well as a main job provider. Around 3.2 million tourists visited Morocco in the first half of 2008, a 12% rise compared with the same period of last year, revealed figures of the Moroccan Department of Tourism.^[14] Morocco has developed an ambitious strategy, dubbed "Vision 2010", aimed at attracting 10 million tourists by 2010. This strategy provides for creating 160,000 beds, thus bringing the national capacity to 230,000 beds. It also aims to create some 600,000 new jobs.

The "Plan Azur", is a large scale project initiated by king Mohammed VI, is meant to internationalise Morocco. The plan provides for creating six coastal resorts for holiday-home owners and tourists (five on the Atlantic coast and one on the Mediterranean), the daily telegraph noted. The plan also includes other large-scale development projects such as upgrading regional airports to attract budget airlines, and building new train and road links. Thus, the country achieved an 11% cent rise in tourism in the first five months of 2008 compared with the same period last year, it said, adding that French visitors topped the list with 927,000 followed by Spaniards (587,000) and Britons (141,000). Morocco, which is close to Europe, has a mix of culture and the exotic that makes it popular with Europeans buying holiday homes.^[15]

External trade

In recent years, Morocco has reduced its dependence on phosphate exports, emerging as an exporter of manufactured and agricultural products, and as a growing tourism destination. However, its competitiveness in basic manufactured goods, such as textiles, is hampered by low labour productivity and high wages. Morocco is dependent on imported fuel and its food import requirement can rise substantially in drought years, as in 2007. Although Morocco runs a structural trade deficit, this is typically offset by substantial services earnings from tourism and large remittance inflows from the diaspora, and the country normally runs a small current-account surplus.^[16]

Morocco signed in 1996 an agreement of association with the European Union which came into effect in 2000. This agreement, which lies within the scope of the Barcelona Process (euro-Mediterranean partnership) started in 1995 and envisages the progressive implementation of a free trade area planned for 2012.

Morocco's trade imbalance rose from 86 billion to 118 billion dirhams between 2006 and 2007 – a 26.6% increase bringing the total amount to 17% of GDP. The Caisse de Dépôt et de Gestion forecasts that if imports continue to rise faster than exports, the disparity could reach 21% of GDP. Foreign Trade Minister Abdellatif Maâzouz said earlier in September that members of the government have agreed to a plan focused on four major areas: a concerted export development strategy, the regulation of imports, market and economic monitoring, and the adaptation of regulations and working practices. The plan, Maâzouz said, "will enable us to redress the external trade situation and to reduce Morocco’s trade deficit." The minister added that that he expects to see a reversal of the imbalance by 2010.^[17]

• Trade with the EU

Morocco's FTA with the EU, which was signed in 1996, entered into force in 2000 and is being incrementally implemented with the aim of creating an EU-Morocco free trade zone by 2012, noting that the abolition of tariffs on industrial goods has been a boon for Moroccan manufacturers as some 75% of Morocco's exports go to Europe. France is Morocco's largest trading partner, followed by Spain.

• • Trade with France

France is Morocco’s largest trading partner for both imports and exports, controlling more than 60 percent of foreign direct investment in Morocco. Morocco has emerged as a major cheap-labour platform for European manufacturers, as well as a commercial trans-shipment point for goods from all around the world passing through the Straits of Gibraltar. Moroccans’ knowledge of French has also led French banking and call-centre firms to set up service operations in Morocco.

In October 2007, French President Nicolas Sarkozy travelled to Morocco on an official state visit to King Mohammed V. Accompanied by 70 top French business executives, Sarkozy confirmed several billion dollars worth of contracts for French firms in Morocco.

• Trade with the US

Moroccan-US trade has risen to $2.3 billion in 2007 from the $1.4 billion since the enforcement of the free trade agreement signed between the two countries in 2006, former Moroccan Minister of Trade and Economy Salaheddine Mezouar said in 2007. Mezouar pointed out that Moroccan clothing exports to the USA had increased by 122% in 2006 while perfume sales had grown by 41%, also noting that US investment in Morocco exceeded $1.5 billion, mainly in tourism and clothing. In 2006, Moroccan-US trade was up 44% over 2005. Moroccan exports to the US netted $521.2 million while American exports to Morocco reached $875.5 million, up 67% from 2005. According to the FTA agreement, Morocco can export to the US a duty-free quota of 15 million square meters of finished goods and 500 tonnes of thread and materials made from fibres and cotton from less developed Sub-Saharan African countries. Morocco is looking to expand its textile markets outside the EU due to strong competition after the EU abolished quotas for Asian textiles in January 2005.^[18] Moroccan exports to the US rose by 25% in 2007, and noted that trade has been facilitated and promoted by the FTA between the two countries. The establishment of a direct merchant maritime line between Tangier and ports on the US East coast would be an essential step to taking trade to the next level.

• Trade with China

Morocco was the second African country to establish diplomatic ties with China since the founding of the People's Republic in 1949. "Sino-Moroccan relations have all along developed soundly and stably with friendly cooperation deepening continuously in all fields, thanks to the joint efforts by the leaders and peoples of the two countries, no matter how international situation changes,"Wu Bangguo, chairman of the Standing Committee of the Chinese National People's Congress, said during his meeting with Abdeloughed Radi, president of Morocco's Chamber of Representatives, in 2005.

In trade and economic cooperation, the volume of bilateral trade has increased incessantly, reaching 1.16 billion US dollars in 2004,"Wu said. Noting marked results in bilateral cooperation such as in traditional fields like fisheries, agriculture, health and engineering projects.

The heads of the parliaments of China and Morocco vowed in Rabat in 2005 to work for the further development of bilateral ties in all fields, including trade.^[19]

• Trade with Gulf Region

As part of its economic liberalization policy, Morocco has concluded free trade agreements with GCC countries, thereby lining Morocco with one of the largest free trade networks in the world and giving it duty-free access to a huge market.^[20]

Investment

Foreign Direct Investments in Morocco grew to $2.57bln in 2007 from $2.4bln a year earlier to position the country in the fourth rank in Africa among FDI recipients, a report of the UN Conference on Trade and Development (UNCTAD) said Wednesday.^[21] Although other studies have showm much higher figures. Most of the FDIs injected in Morocco came from the European Union with France, the major economic partner of the north African kingdom, topping the list with investments worth $1.86bln, followed by Spain ($783mln), the report said. The influx of European countries in Morocco's FDI represents 73.5% of the global amount received in 2007, according to the report which was presented by Souraya Ouali of the Direction of Investments. 19.3% of the investments came from Arab countries, whose share in Morocco's FDI showed a marked rise, as they only represented 9.9% of the entire FDIs in 2006. A number of Arab countries, mainly from the Gulf are involved in large-scale projects in Morocco, including the giant Tanger Med port on the Mediterranean. Morocco remains the preferred destination of foreign investors in the Maghreb region (Algeria, Libya, Mauritania, Morocco and Tunisia), with a total of $13.6mln between 2001 and 2007, which puts it largely on the top of the list.

In terms of sectors, tourism has the lion’s share with $1.55bln, that is 33% of the total FDIs, followed by the real estate sector and the industrial sector, with respectively $930mln and $374mln. Moroccan expatriates’ share of the FDI stood at $92mln in 2007, up from $57mln in 2006, and they touch mainly the sectors of real estate, tourism and catering, according to the report.

Expectations for 2008 are promising, Ms. Ouali said, noting that 72 projects were approved for a global amount of $9.28bln. These are due to open 40,023 direct and stable job opportunities. Morocco is also a source of foreign investments. In 2007, it has injected $652mln in projects abroad, which put the kingdom in the third position in Africa, UNCTAD said.

Morocco has become an attractive destination for European investors thanks to its relocation sites "Casashore" and "Rabatshore", and to the very rapid cost escalation in Eastern Europe, Vice chairman of the "Groupe d'impulsion économique France-Maroc" (GIEFM) said in october 2008.^[22] He stressed that the offshoring sector in Morocco is of great importance as it creates high-level jobs that are generally accompanied by an influx of Moroccan immigrants. He underlined, however, that human resources remain the major concern for companies seeking to gain a foothold in Morocco. In this regard, he deemed "important" the decision of the Moroccan government to accelerate training in the required disciplines.

In a bid to promote foreign investments, Morocco in 2007 adopted a series of measures and legal provisions to simplify procedures and secure appropriate conditions for projects launching and completing. Foreign trade minister, Abdellatif Maazouz cited that these measures include financial incentives and tax exemptions provided for in the investment code and the regional investment centres established to accompany projects.^[23] These measures combined with actions carried out by the Hassan II Fund for Development increased foreign investments in Morocco by $ 544,7 mln in 2007. 20% of these investments came from islamic countries.

• Investment from the Gulf Region

The GCC countries are investing heavily in Morocco, particularly in tourism and real estate. Construction is evident everywhere. These investments reflect the strong diplomatic relations between Morocco and the regimes in the Gulf countries. Some analysts would add the Sunni affinity as another factor, but above all, it is the liberalized economy and the economic reforms in Morocco that appear to be attracting most of the investors from the Gulf region.

The trend of heavy Gulf investments in Morocco came in the wake of 9/11, when GCC countries began to invest more in the Arab world. Due to the oil prices, which climbed about 400% in eight years, member countries of the GCC (Saudi Arabia, United Arab Emirates, Qatar, Bahrain, and Oman) accumulated considerable liquidity that has triggered the drive for diversification.^[24]

The United Arab Emirates (UAE) has been a major player in Morocco’s development. While early investments were primarily in construction and tourism, recent investments have been directed at newer areas such as information technology, agriculture, transportation, telecommunications, automobile and aviation development. The amount of the investments is becoming of great significance for the Moroccan economy Analysts estimate that the potential of investment of the Gulf countries is about $500 billion, and Morocco could conceivably attract no less than 20 billion dollars of that amount.

The stock market capitalisation of listed companies in Morocco was valued at $27,220 million in 2005 by the World Bank.[9]

Moroccan companies and industrial sectors

Morocco counts around 60,000 companies of which 20,000 employs more than 10 employees. By 1999, 6,500 industrial companies of which 92% were Small and medium enterprises (less than 200 employees). The industrial sector constitutes one of the pillars of the Moroccan economy and offers real direct investment appropriatenesses, whether it is for operations of joint venture or subcontracting. Many possibilities exist in the fields of mechanics, metallurgy, electricity, electronics, plastics, information technologies and communication. Other more traditional sectors like leather, textiles, chemistry and building materials also interest foreign investors.

Developement of the Northern Region

Historically, the Casablanca-Rabat axis has been more prosperous and has received more government attention than the predominantly mountainous northern provinces and the Western Sahara region. The uneven development among Morocco's regions fueled a cycle of rural-urban migration that has shown no signs of slowing down. Although the latter region has received government attention since the 1990s because of its phosphate deposits, the northern provinces, which include the Rif Mountains, home to 6 million Moroccans, had been largely neglected. The Rif Mountains are a haven for the cultivation of cannabis.

In 1998, the government launched a program to develop the northern region, largely with international help. Spain had shown particular interest in the development of the region, since its underdevelopment has fueled illegal immigration and drug trafficking across the Strait of Gibraltar.^[25]

When king Hassan II, past on his son Mohammed VI, made it his duty to develop the Northern Region and especially it's biggest city Tangier.

The state-owned railway company will engage some $755 million in investment in the northern region, including building a railway line between Tangier and Tangier-Med port (43km), improving the Tangier-Casablanca railway line and modernizing many train stations over the next few years.

• Tangier

Before 1956, Tangier was a city with international status. It had a great image and attracted many artist. But after Morocco regained control over Tangier, it dozed off. Investment was low and the city lost it's economic importance. But when king Mohammed VI became king in 1999, he developed a plan for the economical revival of Tangier. New developments include a new terminal at the airport, a soccer stadium seating 45,000 spectators, a high-speed trainline and a new highway connected the city with Casablanca. Also a new trainstation was constructed, called Tanger-Ville.

The creation of a free economic zone increased the economic output of the city significantly. It allowed Tangier to become an industrial pole. But the biggest investment was the creation of the new port Tanger-Med. It's the biggest port in Africa and on the Mediterrenean. The city is ondergoing an economic boom. This called the need for a commercial district, Tangier City Center. Wich is now under construction.

The economic boom in the city caused a population boom as well. So upgrading of social services and infrastructure was needed. A large-scale development program was created, requiring MAD 2.46bln (about $320mln) to upgrade the northern city of Tangier was approved in August 2008 under the chairmanship of king Mohammed VI. The program will benefit mainly the popular and suburb neighborhoods of the city in order to guarantee harmony in the urban setting by reinforcing basic infrastructures and providing social equipment to the environment-related projects. This colossal investment is meant to enable Tangier to hook up again with its prestigious image, and cope with the economic development triggered in the northern region, as huge, structuring projects are launched here and there on the Mediterranean coasts of the kingdom. Tangier Medina will benefit from $11.5mln to revamp the road grid, better public transportation, improve traffic and reinforce social equipment.^[26]

A draft loan contract of $180 mln to fund the expansion works of Tanger-Med port was signed in October 2008 to for building a second deepwater port, dubbed "Tangier Med II", to meet the growing demand for containers treatment at the international level in sea transport. The port, to be operational by the second half of 2012, will include two container terminals with a total length of 2,800 m and a nominal capacity of 5 million containers^[27].

The high-speed rail "TGV" linking Tangier with Casablanca will be operational by 2013, and is expected to carry 8 million passengers the first year. This TGV line will require a USD 2.7Bn investment. 18 TGV wagons are needed for this project that will contribute to reducing the duration of the trip between the two economic poles to 2h10 instead of 5h45 now.

Infrastructure

Morocco plans to implement a USD 16.3Bn transport infrastructure program in the period 2008-2012 This program covers several projects such as developing the Tangier-Med port complex, modernizing the rail network, and achieving the first high speed train connection between Tangiers and Casablanca. The program also touches on developing Morocco's airports capacity to accommodate 30Mn passengers in 2010, establishing 630 km of expressways and completing 1,500 km of highways. Nowadays(November 2008) there is an estimated 900 km of highways in Morocco^[28]

The highways construction pace jumped to 160 km currently from 40 km annually in the 90s and 100 km during the 2002-2005 period, noting that investments rose from USD 81.7Mn to USD 543Mn currently.

Unemployment

Morocco's unemployment rate, long a cause for concern, has been dropping steadily in 2008, on the back of job growth in services and construction. Further institutional reforms to bolster competitiveness and financial openness are expected to help the trend to continue.

The State High Planning Commission announced on August 7 that Morocco's official unemployment rate dropped to 9.1% in the second quarter, down from 9.6% in the first. This leaves Morocco with some 1.03m unemployed, compared to 1.06m at the end of March. Unemployment stood at 9.8% at the end of 2007, up 0.1% from the end of 2006.

Urban areas saw particularly strong job growth, and the services and construction sectors were the two leading drivers of job creation. Services generated some 152,000 new jobs, with the business process outsourcing (BPO) and telecoms sector proving particularly dynamic. Meanwhile, government infrastructure projects, as well as heavy private investment in real estate and tourism helped boost the construction sector, which created 80,000 new jobs in the second quarter of 2008.

Evidently, this trend of falling unemployment rates is a positive one. Joblessness has long been a cause for serious concern in North Africa. Morocco has a lower rate than its Maghreb neighbours - Tunisia has a rate of around 13.9%, and in Algeria it is around 12.3% - but the issue is still a pressing one, both for economic and for social reasons. A 2006 government report suggested that the country needed a net increase of 400,000 jobs annually for the next two decades in order to provide enough employment for its people, given the underlying demographic dynamic.

Moreover, with Spanish construction firms facing much harder times, Morocco may soon face the additional challenge of workers returning from across the Gibraltar Straits, potentially putting further pressure on the authorities to create jobs.

With 30.5% of Morocco's population of 34.3m aged 14 or younger, according to the Central Intelligence Agency (CIA), job creation for the young is one of the government's major priorities. 2007 data indicate that 17.6% of those in the 15-24 age group are unemployed. This rises to around one third in urban areas - rural communities often employ the young in agriculture, including on the family farm, as soon as they leave school, contributing to relatively high youth employment rates (lower levels of official unemployment registration are also a factor).^[29]

Handicaps

The Moroccan economy has been facing the problems typical of developing countries—restraining government spending, reducing constraints on private activity and foreign trade, and achieving sustainable economic growth. Current GDP per capita

See also

• Economy of Africa
• Bank Al-Maghrib - Central bank of Morocco
• Morocco and the European Union

Morocco topics History Idrisid dynasty · Maghrawa · Almoravid dynasty · Almohad dynasty · Marinid dynasty · Kingdom of Fez · Saadi dynasty · Republic of Bou Regreg · Alaouite dynasty · Treaty of Fez · French Morocco · Spanish Morocco · 1970s · 1990s · 2000s Politics Kings · Prime Minister · National flag · Coat of arms · Western Sahara Economy Investment · Tourism · Trade Tangier · Companies · Bank Al-Maghrib Geography and demographics Regions · Provinces · Cities · Moroccan Arabic · Languages of Morocco · Berber languages Culture Literature · Media · Music · National football team Military Military history · Army · Navy · Air Force · Gendarmerie

Notes

External links

• Economy of Morocco at the Open Directory Project
• Kingdom of Morocco - Country Strategy Paper 2003-2005 - African Development Bank
• Description of the US-Moroccan FTA
• Final Text of the US-Moroccan FTA
• Description of benefits of the US-Moroccan FTA
• Moroccan-American Trade and Investment Council
• Maroc Entrepreneurs : Association dedicated to the Promotion of Entrepreneurship in Morocco
• Fantastic Morocco Morocco Economy

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