Morocco's unique geography and demographics drive its economic story

At the north-west corner of Africa, just 15 km from Europe across the Strait of Gibraltar, Morocco has a strategically important location and for centuries has been a blend of cultures. Arab, Berber, European and African influences are all part of the country’s unique heritage, which has become famous worldwide thanks to millennia of trade, and in more recent centuries, both the Moroccan diaspora and the millions of tourists who visit annually. Morocco is North Africa’s only monarchy and has both one of its most stable and most inclusive political systems. The country’s long tradition as an international trading centre continues, with a relatively open economy that has drawn in foreign investment and become one of Europe’s major trading partners in Africa. Diplomatically, Morocco’s pragmatic approach has won it a range of allies and partnerships, from its strong commercial and security ties with the EU to a burgeoning relationship with China and the Gulf countries.

Geography

Morocco’s territory covers 710,850 sq km, a little bigger than Texas and around twice the size of Germany. Its coastline on the Atlantic Ocean and the Mediterranean totals 3500 km. Morocco has land borders of just over 2000 km with Algeria, the Spanish enclaves of Ceuta and Melilla (plus the tiny rock of Peñón de Vélez de la Gomera) and Mauretania. The kingdom’s political capital is Rabat, on the Atlantic coast in the north, though the economic centre is Casablanca, which with its population of nearly 3.36m is the largest city. Other major cities include Fez, the former royal capital in the centre-north of the country; Tangiers, at the mouth of the Strait of Gibraltar and the historic gateway to Europe; and Marrakech, another former imperial city and a popular tourist destination. Rabat’s sister city of Salé, across the Bou Regeg River from the capital, is another important population centre.

Climate & Topography 

The country has three main topographical zones. The grassy plains of the north are a centre for agricultural production, while the Rif in the far north is a mix of plains and mountains. The Atlas Mountains form the backbone of the country, and are divided into several sub-ranges: the Middle Atlas, High Atlas and Anti-Atlas. Morocco’s highest peak, Jebel Toubkal, rises 4167 metres in the High Atlas. In the south and east are areas of semiarid land and desert. The climate is varied, from Mediterranean in the northern coastal regions, to the mountains, which see snow in the winter, to very hot deserts. The wettest months are usually November through to January, while the summer is usually dry. In Casablanca the temperature varies from average lows of under 10°C in winter to average highs above 25°C in mid-summer, but temperatures of below freezing and above 40°C have been recorded.

Economy

Morocco benefits from its well-developed manufacturing sector, mining industry, agricultural output, proximity to Europe, sizeable diaspora community, low labour costs and market-oriented public policy. Its economy is well diversified, particularly relative to many countries in the MENA region. Tourism is a substantial contributor, generating nearly $6bn (€5.4bn) in annual revenues, as is the agricultural sector, which can be susceptible to variations in rainfall. In turn, a strong agricultural year can boost GDP growth considerably, while a poorer harvest can act as a drag on headline growth. Manufacturing industries include textiles, automotive and aeronautics, while recent years have seen the expansion of the ICT sector, particularly outsourcing.

Investment in ports, transportation and industrial infrastructure, and the establishment of a free trade zone, have boosted competitiveness and left the kingdom well-positioned to act as a transport hub and business broker across many African markets.

Austerity measures and pro-market reforms undertaken during the 1980s kick-started an economic transformation, and the economy remains stable under the rule of King Mohammed VI, who took the throne in 1999. The economy has also proven fairly resilient to global headwinds over recent years, but is certainly not immune to them. GDP is expected to grow by 2.3% in 2016, picking up to 4.1% in 2017, according to the IMF. Morocco’s political stability has benefitted its economy, while careful fiscal and monetary policy has kept inflation fairly low.

Export growth is supported by an “advanced status” agreement with the EU, signed in 2008, and a bilateral free trade agreement signed with the US in 2006. Morocco’s biggest trading partner is the EU, with flows totalling €30.7bn in 2015, of which €12.5bn were exports to the EU and €18.1bn imports from the bloc, according to figures from the European Commission. Exports to the EU grew at an annual average rate of 9% between 2011 and 2015. Labour costs are low in Morocco, and the minimum wage is set at $287.80 (€259.11) per month.

The trade deficit has been shrinking as exports rise and energy costs fall, dropping by nearly 20% in 2015 to Dh140.02bn (€12.8bn) in November, on the back of 7.1% export growth, and contracting further to Dh120.35bn (€11bn) in August 2016. Export growth in 2015 was driven by an 18.5% increase in auto exports and a 20.6% increase in phosphate sales.

In April 2016 the IMF issued a review of Morocco’s economy, highlighting the need for further improvements in the business climate and continuing fiscal consolidation, with an emphasis on subsidy reduction, public wage moderation, increased investment and social spending, and tax reforms. Morocco’s fiscal deficit was reduced to 4.5% of GDP in 2015, and the country aims to reduce this to 3% in 2017.

Natural Resources

Morocco lacks the large oil or gas reserves that some other North African countries boast and it is a net energy importer. Low global oil prices allowed the country to reduce its fuel import bill by nearly 29% during the first 11 months of 2015, and hydrocarbons imports fell 29.9% year-on-year during the first half of 2016, from Dh41.95bn (€3.8bn) to Dh29.4bn (€2.7bn). Domestic production may be boosted in the longer term by offshore oil and gas development, which has drawn in players including Chevron, Qatar Petroleum and BP. The offshore fields of Cap Rhir Deep, Cap Cantin Deep and Cap Walidia Deep have garnered particular international attention most recently, with Qatar Petroleum moving to buy a 30% participating interest in each of the fields from Chevron in February 2016.

The government is also committed to increasing usage of renewable energy sources, particularly solar power. The world’s largest solar plant, a 580-MW project at Ouarzazarte, is taking shape in the Moroccan desert, with the first phase brought on-line in February 2016.

The country is rich in phosphates, having around three-quarters of the world’s reserves, according to the US Geological Survey. The industry is managed by the formerly state-owned OCP S.A., which extracts and markets phosphates. The company has undergone restructuring in recent years to improve efficiency and sustainability. It is a significant contributor to GDP and has a 10-year plan to boost production from 34m tonnes in 2014 to 50m tonnes over the next 10 years. Other mineral resources include silver, copper and gold.

Morocco’s fertile north is the heartland of its agriculture sector, which contributes around 15% of GDP and employs up to 40% of the working population. Major crops include cereals, citrus fruits, grapes and olives. Fish products are also a growing export earner, with major fishing ports and processing centres in El Jadida, Essaouira, Agadir, Safi and Larache.

Tourism

Morocco’s myriad cultural, archaeological and outdoor attractions and rich diversity have cemented its role as a major regional tourism hub, bolstered by robust air connectivity with Europe, which has driven annual visitor arrivals from 5.8m in 2005 to over 10m in 2015. The sector is an important source of employment, generating 775,000 jobs in 2014, and the World Travel and Tourism Council forecast the industry’s GDP contribution will rise to 17.8%, or Dh279.1bn (€25.6bn) in 2015, with the sector employing 964,000 in the same year. The industry is facing challenges related to regional security, however. Although Morocco has not experienced any recent domestic terrorist attacks, its tourism industry has still been affected by regional events, and international arrivals fell by 6% in 2015 to 10.2m.

Population

The population has more than tripled since 1956, rising from 10.5m in 1956 to hit 33.8m, according to a 2014 census. The majority live in the more fertile, lower-lying north and along the Atlantic coast, where most major cities are found. The population is growing at around 1.3% a year, according to the World Bank, and like other developing countries, Morocco has seen rapid urbanisation over recent decades, with its urban population rising from 29% in 1956 to current levels of 60%. One major challenge for the government is bringing down youth unemployment, which is around 20%. The national unemployment rate is also elevated, standing at 8.6% in mid-2016, although employment growth in the services, construction and industrial sectors has helped offset losses in agricultural employment last year.

Morocco is a young country – 26% of the population is under the age of 14, and 17.2% are between 15 and 24 years old – and its tech-savvy population has driven ICT growth. The kingdom has one of the highest mobile penetration rates in Africa – 127% in 2015 – and internet usage has grown in recent years, with World Bank data showing that internet penetration in Morocco stood at 56% in 2013, compared to 43.8% in Tunisia, 31.2% in Egypt and 16.5% in Algeria.

Diaspora

Remittances from the country’s sizeable diaspora – an estimated 15% of the population lives abroad, mostly in Europe – are another important economic contributor. Remittances totalled Dh58.8bn (€5.39bn) in 2012 and Dh58.4bn (€5.35bn) in 2013, equivalent to around 7% GDP. In April 2016 the World Bank reported that the value of remittances sent from Moroccans living abroad stood at €5.76bn in 2015. Diaspora investment in Morocco remains low, however, in part due to lack of political engagement: although the kingdom established five parliamentary constituencies for the diaspora in 1984, they were eliminated in 1993, and Moroccans living abroad are not permitted to vote in elections.

Language

The official languages are Arabic and Tamazigh, commonly known as Berber. The latter became an official language in 2011. The dialect of Arabic spoken in Morocco – as well as Algeria, Tunisia and Libya – is known as Maghrebi Arabic or darija, and has some Berber and European influences. The three major Berber dialects spoken in Morocco are Tarifit, Tamazigh and Tashelhit. The Berber were among the indigenous people of the Maghreb before the Arab conquest. Morocco’s spell as a French protectorate has led to considerable influence of French culture and language. Additionally, French is the most widely spoken European language, and is regularly used by the business community, the middle and upper classes, and in higher education. Spanish is also spoken by many in the north-east of the country.

Religion

The Moroccan constitution defines Islam as the country’s official religion and 99% of the population are Muslim. Almost all Moroccan Muslims are Sunni and follow the Malekite rite, which is the most prevalent of the four Sunni schools of jurisprudence in the Maghreb region. The king is seen as the leader of Morocco’s religious community, with titles including “Defender of the Faith” and “Commander of the Faithful” established in the constitution. While the country is moderate and tolerant, religion plays an important role in society and in everyday life.

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