Economy of Morocco

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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.[2] Morocco has become a
major player in the African economic affairs,[3] and is the 5th African economy by GDP (PPP).
The World Economic Forum placed Morocco as the 2nd most competitive economy in North
Africa behind Tunisia, in its African Competitiveness Report 2009.[4] Additionally, Morocco
was ranked the 1st African country by theEconomist Intelligence Unit' quality-of-life index,
ahead of South Africa.

Tough government reforms and steady yearly growth in the region of 4-5% from 2000 to
2007, including 4.9% year-on-year growth in 2003-2007 the Moroccan economy is much
more robust than just a few years ago. Economic growth is far more diversified, with new
service and industrial poles, like Casablanca and Tangier, developing. The agriculture
sector is being rehabilitated, which in combination with good rainfalls led to a growth of over
20% in 2009.

The services sector accounts for just over half of GDP and industry, made up of mining,
construction and manufacturing, is an additional quarter. The sectors who recorded the
highest growth are the tourism, telecoms and textile sectors. Morocco , however, still
depends to an inordinate degree on agriculture. The sector accounts for only around 14% of
GDP but employs 40-45% of the Moroccan population. With a semi-arid climate, it is difficult
to assure good rainfall and Morocco’s GDP varies depending on the weather. Fiscal
prudence has allowed for consolidation, with both the budget deficit and debt falling as a
percentage of GDP.

In 2009 Morocco was ranked among the top thirty countries[5][6][7][8] in the offshoring sector.
Morocco opened its doors to offshoring in July 2006, as one component of the development
initiative Plan Emergence, and has so far attracted roughly half of the French-speaking call
centres that have gone offshore so far and a number of the Spanish ones.[9][10][11] According to
experts, multinational companies are attracted by Morocco's geographical and cultural
proximity to Europe,[5][10] in addition to its time zone. In 2007 the country had about 200 call
centres, including 30 of significant size, that employ a total of over 18,000 people.[10]

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.

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, thedirham, is now
fully convertible for current account transactions; reforms of the financial sector have been
implemented; and state enterprises are being privatized.

The major resources of the Moroccan economy are agriculture, phosphates, andtourism.

Sales of fish and seafood are important as well. Industry and mining contribute about one-
third of the annual GDP. Morocco is the world's third-largest producer of phosphates (after
the United States and China), and the price fluctuations of phosphates on the international
market greatly influence Morocco's economy. Tourism and workers' remittances have played
a critical role since independence. The production of textiles and clothing is part of a growing
manufacturing sector that accounted for approximately 34% of total exports in 2002,
employing 40% of the industrial workforce. The government wishes to increase textile and
clothing exports from $1.27 billion in 2001 to $3.29 billion in 2010.

The high cost of imports, especially of petroleum imports, is a major problem. Another

chronic problem is unreliable rainfall, which produces drought or sudden floods; in 1995, the
country's worst drought in 30 years forced Morocco to import grain and adversely affected
the economy. Another drought occurred in 1997, and one in 1999–2000. Reduced incomes
due to drought caused GDP to fall by 7.6% in 1995, by 2.3% in 1997, and by 1.5% in 1999.
During the years between drought, good rains brought bumper crops to market. Good rainfall
in 2001 led to a 5% GDP growth rate. Morocco suffers both from unemployment (9.6% in
2008), and a large external debt estimated at around $20 billion, or half of GDP in 2002.[12]

A reliable European ally in fighting terrorism, drug trafficking and illegal immigration, Morocco
was granted an “advanced status” from the EU in 2008,[13] shoring up bilateral trade relations
with Europe. Among the various free trade agreements that Morocco has ratified with its
principal economic partners, are The Euro-Mediterranean free trade areaagreement 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 Greater Arab Free Trade Area; the US-Morocco Free
Trade Agreement with United States which came into force on January 1, 2006 and lately the
agreement of free exchange with Turkey.
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.
On the whole, the growth rate of the economy will not reduce the unemployment rate
significantly, also taking account of the constant rise in the number of first entrants on the
labour market. The growth level of the last five years did, however, reduce urban
unemployment from 22% in 1999 to 18.3% in 2005, and the national rate from 13.9% in 1999
to 10.8% in 2005. The State High Planning Commission that Morocco's official
unemployment rate dropped to 9.1% in Q2 2008, down from 9.6% in Q1. 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 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).[55]
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