Morocco Economic Outlook

  • Morocco is posting more balanced macroeconomic results with a budget deficit of 4.3% of GDP in 2015 and a clear improvement in foreign exchange reserves to about seven months of imports at the end of the year.
  • The government is continuing its reforms and major investments (Nador West Med port, TGV high-speed train, Noor solar complex, Kenitra Atlantique port) to improve the business climate and attract foreign investors as drivers of innovation and value-added.
  • Territorial reform and successful regional and local elections held in 2015 bode well for the introduction of a new dynamic in governance and local development, allowing towns and cities to be developed in a more sustainable way.

Morocco continued making significant efforts to balance its macroeconomic results in 2015. The budget deficit stood at 4.3% of gross domestic product (GDP), thanks in particular to the economy’s strong performance (growth of 4.5%) and a reduction in government subsidies. Foreign exchange reserves increased to about seven months of imports at the end of 2015 due to a strong export sector and a reduction in imports following the drop in oil prices. These results also reflect the country’s proactive policy of improving the business climate to help to transform its economic model. On the one hand, major steps were taken in the legal and fiscal domains and in exchange regulations. On the other, major public investments are moving forward: the financing of the Nador West Med port has been completed, a call for tenders for the Kenitra Atlantique port was issued in January 2016, and work on the TGV high-speed rail line has continued. These initiatives are bearing fruit, with the automobile sector becoming the country’s chief exporter in 2015. The developments are occurring in parallel with a search for new partners, with Morocco continuing to position itself as a platform for access to African markets. Nonetheless, efforts must be pursued to make growth less volatile through lower dependency on the low-intensity agricultural sector. In 2016, low rainfall is expected to have a strong effect on this sector, with knock-on effects for GDP growth, projected at 1.8%.

Other challenges endure. Morocco must tackle deep inequalities (in terms of gender, geography, education and access to basic services) that can undermine the inclusive nature of its growth. With this in mind, Morocco kept up its strong reform momentum in 2015 to put its regulatory and institutional framework in line with the requirements of its 2011 constitution. First, the decentralisation process took a major step forward with territorial reform and regional and local elections, which are leading to the progressive transfer of power from the central government to local authorities. Second, the government is seeking to improve access to basic social benefits (medical coverage has been extended to the 260 000 students in public higher education and access to Tayssir cash subsidies for keeping primary pupils in school has become widespread). Third, the government remained committed to improving public services and making them more accessible (public services charter, e-government, anti-corruption measures). Finally, the government continued to promote gender equality by implementing quotas for female politicians in the 2015 elections.

Morocco is seeking to develop its economic model in a sustainable way. This approach is being promoted as part of the national sustainable development strategy, but also through the adoption of new legislation like the water law. Morocco, which will host COP22 in 2016, was the second African country to commit to reducing greenhouse gas emissions. However, these initiatives need to be better decentralised, notably to the municipal level. Numerous challenges remain concerning the sustainable development of urban zones, in particular due to the rapid expansion of suburbs.