Economy—overview: Morocco faces the problems typical of developing countries—restraining government spending, reducing constraints on private activity and foreign trade, and keeping inflation within manageable bounds. Since the early 1980s the government has pursued an economic program toward these objectives with the support of the IMF, the World Bank, and the Paris Club of creditors. The dirham is now fully convertible for current account transactions; reforms of the financial sector have been implemented; and state enterprises are slowly being privatized. Drought conditions in 1997 depressed activity in the key agricultural sector, holding down exports and contributing to a 2.2% contraction in real GDP. Favorable rainfalls in the fall of 1997 have led to forecasts of robust, 8%-9% real GDP growth in 1998. Servicing the external debt, preparing the economy for freer trade with the European Union, improving education and living standards, and finding jobs for Morocco's youthful population remain long-term challenges.
GDP: purchasing power parity—$107 billion (1997 est.)
GDP—real growth rate: -2.2% (1997 est.)
GDP—per capita: purchasing power parity—$3,500 (1997 est.)
GDP—composition by
sector:
agriculture: 14%
industry: 33%
services: 53% (1997)
Inflation rate—consumer price index: 3% (1997 est.)
Labor force:
total: 7.4 million
by occupation: agriculture 50%, services 26%, industry 15%, other
9% (1985)
Unemployment rate: 16% (1997 est.)
Budget:
revenues: $10.4 billion
expenditures: $10.75 billion, including capital expenditures of $1.9
billion (1996 est.)
Industries: phosphate rock mining and processing, food processing, leather goods, textiles, construction, tourism
Industrial production growth rate: 4.5% (1996 est.)
Electricity—capacity: 3.788 million kW (1995)
Electricity—production: 10.8 billion kWh (1995)
Electricity—consumption per capita: 411 kWh (1995)
Agriculture—products: barley, wheat, citrus, wine, vegetables, olives; livestock
Exports:
total value: $6.9 billion (f.o.b., 1996)
commodities: food and beverages 30%, semiprocessed goods 23%, consumer
goods 21%, phosphates 17% (1995 est.)
partners: EU 63%, Japan 7.7%, India 6.6%, US 3.4%, Libya 3.4% (1996
est.)
Imports:
total value: $9.7 billion (c.i.f., 1996)
commodities: semiprocessed goods 26%, capital goods 25%, food and
beverages 18%, fuel and lubricants 15%, consumer goods 12%, raw materials
4% (1995 est.)
partners: EU 57%, US 6.6%, Saudi Arabia 5.3%, Brazil 2.8% (1996 est.)
Debt—external: $23.4 billion (1996 est.)
Economic aid:
recipient: ODA, $297 million (1993)
note: $2.8 billion debt canceled by Saudi Arabia (1991)
Currency: 1 Moroccan dirham (DH) = 100 centimes
Exchange rates: Moroccan dirhams (DH) per US$1—9.822 (January 1998), 9.527 (1997), 8.716 (1996), 8.540 (1995), 9.203 (1994), 9.299 (1993)
Fiscal year: July 1-June 30
The export of phosphates and its derivatives account for more than a quarter of Moroccan exports. Morocco is increasing production of phosphoric acid and fertilizers. About one-third of the Moroccan manufacturing sector is related to phosphates and one-third to agriculture with virtually all of the remaining third divided between textiles, clothing, and metalworking. The clothing sector, in particular, has shown consistently strong growth over the last few years as foreign companies established large-scale operations geared toward exporting garments to Europe.
Agriculture plays a leading role in the Moroccan economy, generating between 15 and 20% of GDP (depending on the harvest) and employing about 40% of the work force. Morocco is a net exporter of fruits and vegetables, and a net importer of cereals; over 90% of agriculture is rain-fed. Fishing is also important to Morocco, employing more than 100,000 people, including the canning and packing industries, and accounting for $520 million of exports in 1992.
The Moroccan Government has pursued an economic reform program supported by the International Monetary Fund (IMF) and the World Bank since the early 1980s. It has restrained spending, revised the tax system, reformed the banking system, followed appropriate monetary policies, lifted import restrictions, lowered tariffs, and liberalized the foreign exchange regime. Over the last decade, the reforms have contributed to rising per capita incomes, lower inflation, and narrower fiscal and current account deficits.
Nonetheless, population growth, rural-urban migration, and higher labor force participation rates (particularly among women) are contributing to rising urban unemployment, in spite of generally strong economic growth and job creation. The rapid increase in secondary and university (but not primary) enrollments in the 1980s exceeded the economy's capacity to create jobs, resulting in rising unemployment rates for graduates, which are about 33% for high school graduates and 11% for university graduates.
As part of its IMF program, the Moroccan Government has reduced its budget deficit. The central bank operates as an independent entity, and, following economic reform measures, has been remarkably successful in restoring domestic and international confidence in the value of the kingdom's currency. The government has made the dirham convertible for an increasing number of transactions over the last few years. The central bank sets the exchange rate for the dirham against a basket of currencies of its principal trading partners. The rate against the basket has been steady since a 9% devaluation in May 1990, with changes against the dollar being due to movement of the dollar against major European currencies.
The Moroccan Government actively encourages foreign investment. It has opened virtually all sectors (other than those reserved for the state such as air transport and public utilities) to foreign investment. The government also has made a number of regulatory changes designed to improve the investment climate in recent years, including tax breaks, streamlined approval procedures, and access to foreign exchange for the repatriation of dividends and invested capital.