Situated on the western tip of North Africa, Morocco is classified as a lower-middle-income country by the World Bank with GDP at current prices estimated at $112.55bn and per-capita GDP of $3392 in 2014.
On a purchasing power parity basis, GDP per capita stood at $7,198. It has made remarkable progress reducing poverty over the last decade by more than 40pc. Less than 9pc of its population qualifies as poor compared with 16.2pc a decade ago. Slowing population growth has also played an important role in poverty reduction.
The economy is relatively well diversified with higher value-added sectors, including automotive, electronics, chemicals and aeronautical industries. It is, however, vulnerable in two main areas. Firstly, most of its exports, foreign investments, tourism, and remittances inflows come from eurozone.
Secondly, private consumption depends heavily on the agricultural activity, since 40pc of jobs are in that sector. Since the weather tends to be erratic and irrigation is not yet well-developed, growth in the agricultural sector tends to remain volatile.
The services sector, which accounts for more than half of GDP, has recorded a robust growth in recent years. Tourism and financial services are well developed. And tourism is also an important source of foreign exchange earnings and jobs. The industrial sector accounting for 30pc of GDP is another key source of foreign exchange earnings, with phosphates and phosphate by-products, as well as manufactured goods, being important export products.
Relatively weak economic growth in 2014 reflected reduced agricultural output because of severe drought. Despite economic diversification, agriculture remains a significant sector, accounting for 15pc of GDP with 40pc of employment.
Morocco is expected to emerge as the fastest growing economy in North Africa, with its GDP rising nearly 5pc in 2015, as the new consensus government paves the way for bolder economic reforms. The World Bank forecasts a growth of 4.6pc in 2015.
Morocco sees continued progress toward fiscal consolidation and improvement in external indicators. For the third year in a row, the government expects to further reduce fiscal deficit in 2015 to 4.6pc of GDP and began stabilising the central government debt at around 66pc of GDP.
The draft Finance Bill 2016 seeks a reduction of the budget deficit to 3.5pc of GDP, in order to achieve the 3pc of GDP target by 2017. The fiscal deficit is narrowing owing to lower international oil prices, that has reduced the cost of subsidies, and as a result control on spending.
Improvements on the external front have been more significant. The country’s external current account deficit has reduced to 4.6pc of GDP in the first half of 2015 from 10pc in 2012. Foreign exchange reserves at around $20bn are sufficient to cover more than four months of imports.
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