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	Morocco		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

Principal Commercial and Political Characteristics General Morocco boasts the largest phosphate reserves in the world, a diverse agricultural sector, rich fisheries, a sizable tourist industry, a growing manufacturing sector (especially in the clothing industry), and considerable inflows of funds from Moroccans working abroad. The production and export of cannabis also play a major role in the Moroccan economy, particularly in northern Morocco. Most of Morocco's trade is with Europe, with France alone accounting for about a quarter of Morocco's imports and a third of its exports. Commercial Outlook 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 government spending, revised the tax system, reformed the banking system, followed appropriate monetary policies, eased import restrictions, lowered tariffs and liberalized the foreign exchange regime. The reforms have contributed to rising per capita incomes, lower inflation and narrower fiscal and current account deficits. While the overall trend has been positive, there have been wide year-to-year fluctuations in the economy due to exogenous factors such as decreased rainfall and changing conditions in Morocco's export markets. 1995 saw a four percent drop in GDP, due mostly to heavy drought, but rain in early 1996 ensured healthy growth of 11 percent. The Moroccan economy received a boost by the recent trade deal with the EU (only Israel and Tunisia have made similar deals). Not surprisingly, FDI is expected to increase, possibly as high as US$ 400 million by 1997. Morocco will face serious problems in the coming years, such as its 16 percent unemployment rate and growing public deficit and trade deficit. The trade deficit rose by US$ 75 million to US$ 1.8 billion in the first five months of 1996, compared to a US$ 1.68 billion deficit in the same period last year. Food, drink and tobacco imports also jumped over 29 percent to US$ 650 million for this period, accounting for nearly one-fifth of all imports. Political Outlook Morocco, while not especially central to the Arab-Israeli peace process, has nonetheless gained a lot from it. This is because King Hassan II has unreservedly supported moves towards Israeli-Palestinian reconciliation. In an era where political moderation clearly goes a long way in promoting trade concessions and investment interest, this has greatly improved his image in both the US and the European Community, and in consequence, made Morocco more attractive to investors. With the possible exception of the Algerian leadership itself, no one was more delighted with the results of 1996's Algerian presidential election than the government of Morocco. This is because almost from the first days of the Algerian civil war, outside observers had been insisting that similar national demographics and a shared history under French colonial rule place Morocco at a similar risk. According to the prevailing logic, what happened in one country would almost certainly happen in the other. Morocco, however, is by no means a smaller version of Algeria. King Hassan II as implemented meaningful political reforms since the 1980s, which has left him well-positioned for any future confrontation with Islamic extremists. In early September 1996, Moroccans voted almost unanimously for the King's plan to create a powerful upper-house of parliament and to strengthen economic development efforts as well as Morocco's regional influence. According to official results, 99.56 percent, or more than 10.15 million of the 12.35 million eligible voters, voiced approval for the plan. The plan called for the division of the existing 333-seat parliament into two houses. The lower house, the New House of Representatives, will seat members elected directly by the public. The upper-house, the Chamber of Counselors, will be elected indirectly, mainly through local councils, professional bodies and trade unions, and the Chamber will have the power to force votes of no-confidence and to topple the government. The changes will assist the government in developing Morocco's rural areas, where half of the population now resides. Direct elections to the second house should spread influence to rural areas that have traditionally had little voice in political matters. Despite the poverty in rural Morocco (a population of 1.5 million without per capita income of just over US$ 200), and the high illiteracy rate, the rural areas contribute significantly to the national economy, mostly through the export of agricultural products. Contents Menu Next Chapter

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