•The Moroccan economy grew by 2.8% year-on-year (YoY) in the first quarter in 2012, down from 5.3% in the previous quarter amid a poor harvest and the European debt crisis.
•While most of the non-agricultural sectors continued to expand, the mining sector and the hotel and restaurant sector went down, respectively, by 7.8% and 4.9% in the first quarter of 2012 from the year-earlier period.
•Morocco’s political reforms helped the country avoid the backlash of the Arab Spring which toppled many governments in North Africa in 2011, while contributing to economic stability.
•Hong Kong's exports to Morocco dropped by 23.5% YoY to US$45 million in the first five months of 2012, while imports plunged by 36.8% YoY to US$41 million due to a slump in electronics imports.
Current Economic Situation
Due to a poor harvest and the European debt crisis, the Moroccan economy grew only by 2.8% YoY in Q1 2012, down from a growth of 5.3% in Q4 2011. Most of the non-agricultural sectors continued to expand, except for mining which saw sectoral growth fall by 7.8% YoY in Q1 2012 due to lower phosphate production (of which Morocco is a major exporter in the world). The number of visitors to Morocco dropped under the economic turmoil in Europe, making the hotel and restaurant sector decline by 4.9% YoY in Q1 2012.
Morocco is one of the few countries in North Africa not having widespread protests, thanks to timely political reforms which helped the country avoid the political backlash of Arab Spring, which toppled governments in Tunisia and Libya. The most notable development was the adoption of a new constitution strengthening civil rights. As such, Morocco showed economic resiliency in 2011 compared to other North Africa countries.
About 40% of Moroccans were employed in the agriculture sector, though it only accounted for 16.4% of the country’s GDP in 2010.
Industry accounted for 28.5% of the Moroccan economy in 2010. Major industries in Morocco include chemicals and fertilisers, textile and garment, electronics, and food.
The GDP share of the services sector in Morocco was at 55.1% in 2010, with tourism being the major service industry. The performance of tourism sector is heavily dependent on Europe, which accounts for about 80% of the country’s tourists. Morocco’s information technology outsourcing (ITO) and business process outsourcing (BPO) are fast developing, capitalising on a lower-cost French-speaking population (and to a lesser extent, Spanish-speaking population) to tap the French outsourcing businesses (and similarly, the Spanish market). The government expects outsourcing businesses to generate about US$1.7 billion and create 100,000 new jobs by 2015. As of 2011, 52,000 employments and US$0.9 billion were created in the sector. In June 2012, Morocco received the “Offshoring Destination of the Year” from the European Outsourcing Association (EOA), testifying to its attractiveness as an outsourcing choice for European companies.
Morocco’s fiscal deficits widened to 5.9% of GDP in 2011. The deterioration was due to a surge in subsidy and higher wages for government employees. As an oil importer, lowering government expenditure continues to be a challenge in the face of high oil prices.
The government launched Plan Emergence in 2007, a programme to enhance Morocco’s competitiveness. It identified several key industries for further development, including: outsourcing, the agro-food industry, the seafood industry, textiles, the automotive, aeronautics and electronics sectors. It would boost these sectors through the construction or dedicated industrial zones, encouraging the development of higher value-added products and support in overseas marketing.
The Moroccan Dirham is not yet fully convertible, but its foreign exchange regime is liberal enough not to hamper normal trade transactions. The currency is convertible for all trade in goods and services. The Foreign Exchange Office (Office des Changes) administers foreign exchange matters, and certain procedures have been delegated to authorised banks.
Imports into Morocco must have the import certificate registered with an authorised bank and an import declaration issued by the Ministry of Foreign Trade. Upon receipt of import documents, payment in foreign currency can be arranged.
Currently, products imported into Morocco may be subject to customs duty, the parafiscal import tax (0.25% for most products), value added tax (VAT), and domestic consumption taxes (TIC), as well as other various duties and taxes.
All the tariffs are calculated as a percentage of an import item’s CIF value (ad valorem). Since 2002, Morocco’s simple average applied MFN tariff has fallen from 33.4% to 18.1% in 2010. Tariffs are higher (42.0%) on agricultural products than non-agricultural products (14.4%), as agriculture remains the most highly protected sector. Import restrictions are applied to goods such as weapons, absinthe and hashish.
VAT applies to imported or locally produced goods and services. For imports, it is levied on the customs value, plus any duties and taxes imposed, including the domestic consumption tax. For locally produced goods, it is calculated on the selling price. VAT does not apply to agricultural activities.
Morocco does not have any special regulations on the marking of containers. Labels must be in French or Arabic and must show the country of origin. Besides, metric measurements should be used as it is the legal standard.
Morocco has signed a number of free trade agreements (FTAs) or trade facilitation agreements, giving Moroccan products preferential access to other markets. These include: the US, the EU, the European Free Trade Association (EFTA)1; Egypt, Jordan, Tunisia (the “Agadir Agreement”), Turkey, and the Pan-Arab Free Trade Area (PAFTA) which consists of 17 Arab member countries. Canada and Morocco completed the third round of talks toward free trade agreement in June 2012.
Morocco - Overview