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Casablanca: Morocco Outlook for 2015-17


The country (Morocco) is situated in Northern Africa andbordering the North Atlantic Ocean and the Mediterranean Sea, between Algeria and Mauritania.

Morocco is a country with 3 worlds; the Arab world, the Jewish world and the Berber world. The majority of the population is Muslim. Morocco has an area of 446,550 square kilometers and a coastline of 1,835 kilometers.

The country has a population of slightly over 32 million people according to 2013 estimates. Morocco has a sizeable community of about 1.7 million expatriates living abroad, mainly in Spain, France, and Italy.

Morocco’s economy depends on mostly agriculture, phosphates and minerals.

Hassan II Mosque, found in Morocco is one of the most famous Islamic buildings. Its beautiful architecture with modern touches has helped it become a destination for Muslims and non-Muslims alike.

The official language of Morocco is Moroccan Arabic.


Strengths (+) and weaknesses (-)

(+) Relatively well developed capital market

While the Moroccan government has posted high fiscal deficits, it has been able to finance these deficits to a large extent domestically thanks to the existence of a relatively well-developed local capital market.
(+) The King acts as a stabilizing factor for political stability

Despite political tensions in the region, the monarchy remains popular and is having a stabilizing role as the ‘mediator’ between conflicting political parties.
(-) Large share of youths economically and politically excluded

45% of the population is aged 25 or below, but they are hardly represented in politics and cannot earn a living (youth unemployment 19 %). This constitutes an environment prone to upheaval.
(-) Large current account deficit and high fuel and food import dependency

Morocco has had a large current account deficit in recent years. Its high fuel and food import dependency makes it highly vulnerable to commodity price volatility.

Greater resilience to negative climatic and regional influences
Economic growth was relatively weak in 2012 and 2014 (+2.7% and +2.5%, respectively), reflecting reduced agricultural output because of severe drought. Despite economic diversification, agriculture remains a significant sector, accounting for 15% of GDP but around 40% of employment and therefore has a greater weighting in terms of the demand component of growth. Rural incomes and spending power are closely aligned with the fortunes of the largely rain-fed agricultural sector. However, the economy is now more relatively diversified, with higher value-added sectors, including automotives, electronics, chemicals and aeronautical industries. Moreover, Morocco has remained relatively insulated from the worst effects of the Arab Spring and its regional repercussions.

Political outlook

Parti de l'Istiqlal's resignation from the government has forced the Parti de la justice et du développement (PJD) to search for a new coalition partner. However, the PJD is close to cementing a transaction with the Rassemblement national des indépendants (RNI), the third-major party in parliament.

Economic policy outlook

There is no major change to the economic policy estimate. The government has ambitious plans for the non-phosphate mining industry, but success will depend on stronger world request.

Economic forecast

In Morocco, services is the largest sector (49% of GDP). Tourism represents an important FX earner and employs around 40% of the labor force. The industrial sector (28% of GDP) is dominated by the textile and clothing sector targeting European markets, but has diversified in recent years. Morocco is the largest phosphate producer in the world (75% of total phosphate reserves are located in Morocco), which makes it a vital trade partner for Europe. I

n the past decade, the good economic performances of Morocco contributed to reduction and poverty and unemployment. Social development has been supported through national programs for access to water, energy and transportation. Despite this, social development is still rather low (see indicators), also due to issues such as illiteracy and gender inequality. Freedom of speech is limited as critics of the King, government and Islam can face criminal charges. Historically, the King was named commander of the faithful and seen as descendant of the prophet Mohammed. It is estimated that over 10% of Moroccans live abroad, mainly in Europe.

These Moroccans are not allowed by the King to give up their Moroccan nationality. This large expatriate population is economically important, as it is a major source of remittances and tourism. Morocco has an ongoing conflict with Algeria about sovereignty in Western Sahara. UN peace keeping resolutions are used to manage this conflict and little change is expected for the near future after a new peacekeeping resolution was adopted on April 25th 2013.

Outlook for 2015-17

  • The political situation will be broadly stable in 2013-17 under the policy of the king, Mohammed VI. Protests will continue, but they will not pose a threat to the regime, which will respond with further modest political reforms.
  • The government will remain weak and riven with internal disputes, and widespread disaffection with the formal political process will continue.
  • We expect the attempts by Abdelilah Benkirane-the leader of the ruling Islamist Parti de la justice et du développement-to forge a new coalition to succeed. However, an early election cannot be completely discounted.
  • Ties with the Gulf Arab monarchies will strengthen. The government sees a diversification of economic links as an significant means of ameliorating the impact of recessionary conditions in Europe.
  • The fiscal account will remain in deficit in 2013-17 as the government spends heavily in an effort to boost job increase and reduce political discontent, although it will narrow considerably. Subsidy reform will evolution, but slowly.
  • Real GDP increase is estimate to pick up to 4% in 2013, helped by an improved agricultural performance. As world economic conditions improve, increase will again accelerate to an annual average of 4.7% in 2014-17.
  • The current account will remain heavily in deficit, but rising inflows from remittances and services will reduce the shortfall from 10.2% of GDP in 2012 to a additional manageable 3.4% of GDP in 2017.


  • Talks to form a new coalition are under way, following the decision of Istiqlal, a conservative party, to withdraw from the Islamist led government.
  • According to the Ministry of the Interior, the authorities have dismantled a terrorist cell linked to al Qaida in the Islamic Maghreb (AQIM).
  • Real GDP grew by 4.3% year on year in the second quarter of 2013, largely as a result of a good performance by the agricultural sector.
  • Reflecting higher spending, the fiscal deficit increased to Dh30.4bn (US$3.6bn) in the initial half of 2013, up from Dh23.9bn in the same period of 2012.
  • The IMF has renewed Morocco's two year precautionary and liquidity line, worth US$6.2bn, next completing the second review at the end of July.
  • Next additional than a decade of wrangling between workers' unions, employers and the government, an agreement has finally been reached to set up Morocco's initial unemployment benefits programme.
  • According to the 2013 World Investment Statement published by the UN, Morocco was the major recipient of foreign direct investment in North Africa in 2012.

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