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World > Africa > Morocco > Economy (Notes)

Morocco - Economy (Notes)


ECONOMY
Macroeconomic stability, coupled with low inflation and relatively slow economic growth, has characterized the Moroccan economy over the past several years. The Jettou government continues to pursue reform, liberalization, and modernization aimed at stimulating growth and creating jobs. Employment, however, remains overly dependent on the agriculture sector, which is extremely vulnerable to inconsistent rainfall. Morocco's primary economic challenge is to accelerate growth in order to reduce high levels of unemployment and underemployment. While overall unemployment stands at 11%, this figure masks significantly higher urban unemployment, as high as 33% among urban youths.

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 between 1999 and 2004 remained at 1.5% and fell to 1% in 2005. Despite criticism among exporters that the dirham has become badly overvalued, the country maintains a current account surplus. Foreign exchange reserves are strong, with over $16 billion in reserves, the equivalent of 11 months of imports at the end of 2005. The combination of strong foreign exchange reserves and active external debt management gives Morocco ample capacity to service its debt. Current external debt stands at about $15.6 billion, or 27.8% of GDP.

Economic growth has been hampered by an over-reliance on the agriculture sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 15% to 20% of GDP. Given that almost 50% of Morocco's population depends directly on agriculture, droughts have a severe negative effect on the economy.

The current government is continuing a series of structural reforms begun in recent years. The most promising reforms have been in labor market and financial sectors, and privatization has accelerated the sale of Global System for Mobile Communications (GSM) licenses in the last few years. 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 the President Bush's vision of a Middle East Free Trade Area and is the first in Africa. 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.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions - Moroccan Dirham Exchange Rates
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions
Moroccan Dirham Exchange Rates


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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