• Military Menu                       

• Introduction
• Systems
• Facilities
• Agencies
• Industry
• Operations
• Countries
• Hot Documents
• News
• Reports
• Policy
• Budget
• Congress
• Links

• WMD
• Intelligence
• Homeland Security
• Space

Moroccan Economy

The IMF approved 02 august 2016 a two-year, $3.47 billion liquidity line for Morocco to support the country continue its economic reforms and further strengthen its growth prospects. The arrangement is under the IMF’s Precautionary and Liquidity Line, which provides insurance against external shocks in light of heightened uncertainty worldwide. This will help the government to continue with their reform agenda aimed at promoting inclusive growth by addressing challenges such as high youth unemployment (about 21 percent in 2015), low female labor force participation, and boosting competitiveness, in a still adverse external environment. Morocco has implemented challenging reforms such as modernizing the budget framework, enacting energy subsidy reforms, strengthening the domestic financial sector, and most recently reforming the civil service pension system.

The government has implemented important reforms to further diversify the economy. These efforts are now bearing fruit as reflected in the rapid emergence of new and higher valued added industries (automobile, aeronautics, and electronics), which now provide Morocco with more export revenues than traditional sectors such as agriculture or phosphates. The country has also further developed its tourism industry.

Morocco’s overall economic performance has improved. Economic growth remains robust and inflation remains low. In the first quarter of 2014, growth decelerated to 1.7 percent (compared to the same period in 2013) pushed down by a return to normal cereal yields and weak growth in Europe. The external current account balance is expected to continue improving after its 2012 deficit peak, as a result of a lower fiscal deficit, improving external demand and the development of new exports sectors. Reserves have increased and the fiscal deficit should further narrow in 2014 as a result of measures taken by the government, including the significant progress made in reforming the system of generalized subsidies.

Over the past three decades, the Moroccan economy has grown slowly -- from 1980 to 2006, per capita incomes only grew 1.5% annually. Despite recent macroeconomic stability, slow growth has left unemployment consistently high and extreme poverty remains over 10%. As indicated by the 2002 Arab Human Development Report, the per capita income in Morocco is growing very slowly indicating a quasi-stagnation of economic growth and a relative deterioration in the average standard of living for the whole population.

The ratio (11.7) of the richest 10% to the poorest 10% is excessively high compared with developed countries and even with developing countries. As a corollary, 19% of the Moroccan population live under the national poverty line, of which 70% are living in rural area, yielding a second discrimination at a regional level. The estimated earned income of women is less than 40% of that of men and the share of non-agricultural wage employment is 73% for men and 27% for women. Consequently, the discrimination encountered by a poor rural woman is threefold.

In 2004 Morocco's GDP was US$50.1 billion and per capita income was US$1,677. Real GDP growth of 3.7 percent reflected strength in energy and mining and, to a lesser extent, tourism. Estimates for 2005 placed GDP at US$52.7 billion with a growth rate of about 1.8 percent. Morocco's relatively slow growth compared with the rest of North Africa resulted from the sub-par performance of the agricultural and textile sectors. Economic output in 2004 was divided among sectors as follows: agriculture, 16.7 percent; industry, 29.7 percent; and services, 53.6 percent. Government revenues for 2005 were estimated at US$12.9 billion and expenditures at US$16.77 billion. The resulting deficit would constitute about 7 percent of gross domestic product (GDP).

The Moroccan economy has been characterized by macroeconomic stability, with generally low inflation and an acceleration in growth rates over the past several years. Recent governments have pursued reform, liberalization, and modernization aimed at stimulating growth and creating jobs. While economic growth has historically been hampered by an over-reliance on the agriculture sector, these reforms have made the economy more resilient, even in years of poor rainfall. Thus in 2007, continued strong performance by non-agricultural sectors ensured a positive growth rate, even as agricultural production contracted by nearly 20%. Growth in 2008 is estimated to have been close to 6%.

Morocco's primary economic challenge is to accelerate growth and sustain that improved performance in order to reduce high levels of unemployment and underemployment. While overall unemployment stood at 9.9%, this figure masked significantly higher urban unemployment, as high as 33% among urban youth. The labor force was estimated to exceed 11 million in 2005. The distribution of the workforce in 2004 was as follows: 45 percent in services, 40 percent in agriculture, and 15 percent in industry. In 2004 Morocco's unemployment rate was 10.8 percent, representing a gradual but steady improvement over a five-year period. The urban unemployment rate (18.4 percent) was much higher than the rural rate (3.1 percent). In addition, the unemployment rate was much higher for young people living in urban areas than for any other group. In 2002 the unemployment rate among city dwellers between the ages of 15 and 24 was 34.2 percent and 26.2 percent for those between the ages of 25 and 34. As of 2004, Moroccan law mandated a 44-hour workweek and a minimum wage of about US$223.30 per month for industrial workers. In the view of the U.S. Department of State, the minimum wage is inadequate to support a "decent standard of living" for a worker and his or her family.

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 was 2.5% in 2007, but did spike to 3.9% in 2008 as a result of rising international commodity prices. Despite criticism among exporters that the dirham had become badly overvalued, the country maintained an account surplus until 2007, thanks to transfers from Moroccans resident abroad, tourism revenue, and foreign investment. Morocco has since run a slight deficit, but foreign exchange reserves remain strong, with over $28 billion in reserves, the equivalent of 6.8 months of imports at the end of 2008. The combination of strong foreign exchange reserves and active external debt management gives Morocco ample capacity to service its debt. Current external debt is estimated to have stood at about $18.6 billion at the end of 2008.

The government has continued a series of structural reforms begun under its predecessors. The most promising reforms have been in the financial sector, and privatization has reduced the size of the public sector. 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. In January 2006, the bilateral Free Trade Agreement (FTA) between the United States and Morocco went into effect. The FTA represents an important step towards a Middle East Free Trade Area. The U.S.-Morocco FTA eliminated tariffs on 95% of bilateral trade in consumer and industrial products with all remaining tariffs to be eliminated within nine years. The negotiations produced a comprehensive agreement covering not only market access but also intellectual property rights protection, transparency in government procurement, investments, services, and e-commerce. The FTA provides new trade and investment opportunities for both countries and will encourage economic reforms and liberalization already underway.

In addition to the United States-Morocco FTA, Morocco has entered into an Association Agreement with the EU which provides preferential tariffs for most industrial goods, an FTA with Turkey, a Pan-Arab Agreement with 17 Arab countries, and a regional trade agreement with Tunisa, Egypt and Jordan (the Agadir Agreement). In October 2008, Morocco was granted "advanced status" by the EU, which could ultimately lead to conclusion of a broader free trade agreement encompassing agriculture and services, and a status like that of countries in the European Free Trade Area (EFTA). While in general, the United States-Morocco FTA provides for equal or preferential treatment for most U.S. goods and services, Morocco recently agreed with the EU to accelerate reduction of certain textile tariffs that provides a more preferential schedule than what was negotiated in the United States-Morocco FTA.