ECONOMY OF MOROCCO
Morocco's economy is considered a liberal economy governed by the law of supply and demand although certain economic sectors still remain in the hands of the government.
The economic system of the country presents several facets. It is characterized by a large opening towards the outside. France remains the first trade partner (supplier and customer) of Morocco. France is also the first creditor and foreign investor in Morocco.
We can quote the various agreements of free trade that Morocco ratified with its principal economic partners like 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 USA which came into force in January 1, 2006 and lately the agreement of free exchange with Turkey. (See section below)
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
For purchasing power parity comparisons, the US Dollar is exchanged at 3.33 Dirhams only.
Since the early 1980s the Moroccan 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 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 to 2001 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 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 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.
Morocco's economy is considered a liberal economy governed by the law of supply and demand although certain economic sectors still remain in the hands of the government.
The economic system of the country presents several facets. It is characterized by a large opening towards the outside. France remains the first trade partner (supplier and customer) of Morocco. France is also the first creditor and foreign investor in Morocco.
We can quote the various agreements of free trade that Morocco ratified with its principal economic partners like 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 USA which came into force in January 1, 2006 and lately the agreement of free exchange with Turkey. (See section below)
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
For purchasing power parity comparisons, the US Dollar is exchanged at 3.33 Dirhams only.
Since the early 1980s the Moroccan 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 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 to 2001 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 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 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.