Morocco's economic challenges in 2012
Morocco has not suffered the damage to infrastructure sustained by Tunisia,Libya and Egypt during their revolutions and it is not facing a national debt in the billions. Having agreed constitutional changes by referendum it does not have to recreate its constitution and the PJD led government has been successfully formed . Morocco has a significant advantage.
Source : https://www.marocafrik.com/english/Morocco-s-econo...
It's neighbour Algeria which has also avoided major disruption due to the Arab Spring faces elections in May. Morocco has reason to celebrate its stability but significant econmic challenges lie ahead in an increasingly difficult world economic environment which is now being compared by some, including President Sarkozy, as the worst world economic outlook since the 1930's.
The Government spending rise has cushioned economy in 2011 and the decision to raise the salaries of public workers, the police and the army was a sensible move to ensure stability but continued use of food and fuel subsidies looks unsustainable given the size of the budget deficit.
It is estimated that some 15 per cent of the population lives on US$2 a day or less. Inner city unemployment among the young is estimated at over 30 per cent.Many are feeling the pinch in their daily lives,food prices continue to rise. Cooking oil is not subsidised and spending power is down.Many are feeling the pinch.
The government has pushed ahead with infrastructure and public housing projects and the Moroccan economy's growth last year is exports,estimated 5 per cent up from 4 per cent in 2010, but many are questioning if this continued growth is sustainable.
The slump in the Eurozone and the debt crisis seems to show no signs of a let up and this remains the largest export market taking 60 per cent of Moroccan exports.EU imports of Moroccan goods grew 7.8 percent in 2011, slowing from 19.8 percent growth in 2010.The current account deficit in 2011 surged to 6.5 percent of GDP in 2011 from 4.3 percent in 2010, reaching its highest level since the 1980s.The agreement passed by the EU Parliament on Moroccan agricultural and fish products will undoubtedly help but one adverse factor is that the European slump could cut the amount of remittances from Moroccans living a broad which last year stood at $7 billion in 2011 which was more than the the revenue generated by phosphate exports.
Moroccan exports to Europe are also declining due to the economic climate and tourism, another major hard currency earner may also suffer due to economic pressures in the EU which mean that families spending power is declining in the face of lower salaries, higher prices and taxes.Holdiays abroad are likely to be cut back.
Tourism professionals are seeking to diversify Morocco's tourism markets but this is difficult to do in the short term. The investment by Qatar , Kuwait and the UAE of 2.5 $billion in Morocco's tourism infrastructure was a significant boost and 5 star hotels continue to come on stream but they are struggling with occupancy levels of 40 per cent or less.
The Moroccan balance of payments is therefore likely to worsen in 2012.The current account deficit in 2011 surged to 6.5 percent of GDP in 2011 from 4.3 percent in 2010, reaching its highest level since the 1980s.Any lowering of foreign currency reserves as a result of a decline in exports and tourm receipts could erode Morocco's ability to pay for imports particularly fuel and wheat. It is vulnerable to any rise in international prices. Foreign currency reserves at the end of 2011 were US$ 20 billion which it is estimated would cover 5 months of imports.
As calls mount for the revitalisation of the Arab Maghreb Union there is an increasing awareness that an internal regional trading block will add more potential for intermaghrebian trade as contries search for additional markets. The bolstering of internal synergies and strenghts can only help.
In a BBC video report from a correspondent in Rabat its asks "Can Morocco kick start its economy ? " and Fouad Ammor an Economics Professor from Mohammed V University,Rabat and Karim Tazi CEO of Richbond remarked that investors are being put off by bureaucracy and corruption which the PJD government has declared that it will address. Another important issue is law reform. Morocco's progress since 1999 has been substantial but more needs to be done in a way that is sustainable give the difficult world economic scenario.
As Morocco coped better than the rest of the Maghreb with the upsurge of the Arab Spring it also has to navigate the diffcult economic waters ahead and find new trading partners in the Middle East,Asia and the BRIC countries.
The Government spending rise has cushioned economy in 2011 and the decision to raise the salaries of public workers, the police and the army was a sensible move to ensure stability but continued use of food and fuel subsidies looks unsustainable given the size of the budget deficit.
It is estimated that some 15 per cent of the population lives on US$2 a day or less. Inner city unemployment among the young is estimated at over 30 per cent.Many are feeling the pinch in their daily lives,food prices continue to rise. Cooking oil is not subsidised and spending power is down.Many are feeling the pinch.
The government has pushed ahead with infrastructure and public housing projects and the Moroccan economy's growth last year is exports,estimated 5 per cent up from 4 per cent in 2010, but many are questioning if this continued growth is sustainable.
The slump in the Eurozone and the debt crisis seems to show no signs of a let up and this remains the largest export market taking 60 per cent of Moroccan exports.EU imports of Moroccan goods grew 7.8 percent in 2011, slowing from 19.8 percent growth in 2010.The current account deficit in 2011 surged to 6.5 percent of GDP in 2011 from 4.3 percent in 2010, reaching its highest level since the 1980s.The agreement passed by the EU Parliament on Moroccan agricultural and fish products will undoubtedly help but one adverse factor is that the European slump could cut the amount of remittances from Moroccans living a broad which last year stood at $7 billion in 2011 which was more than the the revenue generated by phosphate exports.
Moroccan exports to Europe are also declining due to the economic climate and tourism, another major hard currency earner may also suffer due to economic pressures in the EU which mean that families spending power is declining in the face of lower salaries, higher prices and taxes.Holdiays abroad are likely to be cut back.
Tourism professionals are seeking to diversify Morocco's tourism markets but this is difficult to do in the short term. The investment by Qatar , Kuwait and the UAE of 2.5 $billion in Morocco's tourism infrastructure was a significant boost and 5 star hotels continue to come on stream but they are struggling with occupancy levels of 40 per cent or less.
The Moroccan balance of payments is therefore likely to worsen in 2012.The current account deficit in 2011 surged to 6.5 percent of GDP in 2011 from 4.3 percent in 2010, reaching its highest level since the 1980s.Any lowering of foreign currency reserves as a result of a decline in exports and tourm receipts could erode Morocco's ability to pay for imports particularly fuel and wheat. It is vulnerable to any rise in international prices. Foreign currency reserves at the end of 2011 were US$ 20 billion which it is estimated would cover 5 months of imports.
As calls mount for the revitalisation of the Arab Maghreb Union there is an increasing awareness that an internal regional trading block will add more potential for intermaghrebian trade as contries search for additional markets. The bolstering of internal synergies and strenghts can only help.
In a BBC video report from a correspondent in Rabat its asks "Can Morocco kick start its economy ? " and Fouad Ammor an Economics Professor from Mohammed V University,Rabat and Karim Tazi CEO of Richbond remarked that investors are being put off by bureaucracy and corruption which the PJD government has declared that it will address. Another important issue is law reform. Morocco's progress since 1999 has been substantial but more needs to be done in a way that is sustainable give the difficult world economic scenario.
As Morocco coped better than the rest of the Maghreb with the upsurge of the Arab Spring it also has to navigate the diffcult economic waters ahead and find new trading partners in the Middle East,Asia and the BRIC countries.
Source : https://www.marocafrik.com/english/Morocco-s-econo...