Country Brief

Introduction

The Kingdom of Morocco is a middle-income country of 30 million inhabitants pursuing political, social and economic modernization. Since taking over from his father in 1999, King Mohammed VI has introduced legislation to promote women’s rights and made fighting poverty a central aim. At the same time, the government has embarked on ambitious economic reforms to boost the country’s growth rate and spread its benefits more widely. These efforts come in response to persistent economic and social problems faced by the country.

Despite rapid industrialization, the Moroccan economy remains heavily dependent on agriculture and vulnerable to climatic conditions and the evolution of export markets. Moreover, its sizable textile sector is facing increased competition following the elimination of international quotas in January 2005. Although it has made considerable progress in improving human development in recent years, Morocco trails other countries in its region in a number of indicators and is ranked 126 out of 177 countries in the U.N. Human Development Index.

Economy Overview

Morocco has a fairly diverse economy in which trade plays an important role. Its economic policies brought macroeconomic stability to the country in the early 1990s but have not spurred growth sufficient to reduce unemployment - nearing 20% in urban areas - despite the Moroccan Government's ongoing efforts to diversify the economy. Morocco's GDP growth rate slowed to an average of 2.1% in 2007 as a result of a draught that severely reduced agricultural output and necessitated wheat imports at rising world prices. Continued dependence on foreign energy and Morocco's inability to develop small and medium size enterprises also contributed to the slowdown. Moroccan authorities understand that reducing poverty and providing jobs are key to domestic security and development. Agriculture remains a major factor in overall economic performance, with the sector accounting for an average of 12 to 20 % of the total gross domestic product (GDP) and employing 40 % of the labour force. About 25 % of the labour force is engaged in industry and 35 % in services. The main industrial activities are textile production, mining of phosphates and food processing, while services are dominated by tourism and commerce.

The economy is relatively open, with exports and imports accounting for about 50 % of GDP. Europe is Morocco’s major trading partner and exports include textiles, agricultural and fish products, phosphates and phosphate derivatives. Morocco is pursuing a progressive integration to the European market through the establishment of the Association Agreement, signed in 1996 and came into force in 2000, and the « advanced status » agreement signed in 2008 to reinforce the free trade, security and political and economic cooperation. Also a Free Trade Agreement (FTA) between Morocco and United States of America came into effect in 2006. Long-term challenges include improving education and job prospects for Morocco's youth, and closing the income gap between the rich and the poor, which the government hopes to achieve by increasing tourist arrivals and boosting competitiveness in textile.

Development Context

During the last 30 years, Morocco has embarked on a gradual but solid program of human development and political liberalization. Since the 1970s, gross national income per person more than quadrupled from $550 to $2 300. The average life expectancy has increased from 55 in 1970 to 72.4 in 2007. During the same period, the average number of births per woman has seen a dramatic decline from 6.3 to 2.3 while the number of children dying before age one has dropped from 115 to 38 (per 1,000 live births). Substantial educational improvements during the past 30 years include a primary school net enrolment increase from 47 to 89 % by 2006. Substantial progress was made in reducing poverty incidence. Recent data shows that poverty was reduced from 15.3 % in 2001 to 14.2 % in 2004 (estimated figure), and further to 9.0 % in 2006-07. However, vulnerability remains a serious concern and an important challenge to human development.

In 2005, Morocco launched the National Initiative for Human Development (INDH), a $2 billion social development plan to address poverty and unemployment and to improve the living conditions of the country's urban slums. Moroccan authorities are implementing reform efforts to open the economy to international investors.

Long-term challenges include improving education and job prospects for Morocco's youth, and closing the income gap between the rich and the poor, which the government hopes to achieve by increasing tourist arrivals and boosting competitiveness in textiles.