|Macroeconomic stability coupled with relatively slow economic growth
characterize the Moroccan economy over the past several years. The present
Youssoufi government has introduced a number of important economic reforms
over the past several years. The economy, however, remains overly
dependent on the agriculture sector. Morocco's primary economic challenge
is to accelerate growth in order to reduce high levels of unemployment.
Through a foreign exchange rate anchor and well-managed monetary policy, Morocco has held inflation rates to industrial country levels over the past decade. Inflation in 2000 and 2001 were below 2%. Despite criticism among exporters that the dirham has become badly overvalued, the current account deficit remains modest. Foreign exchange reserves are strong, with more than $7 billion in reserves at the end of 2001. The combination of strong foreign exchange reserves and active external debt management gives Morocco the capacity to service its debt. Current external debt stands at about $19 billion.
Economic growth, however, has been erratic and relatively slow, partially as a result of an overreliance on the agriculture sector. Agriculture production is extremely susceptible to rainfall levels and ranges from 13% to 20% of GDP. Given that almost 50% of Morocco's population depends directly on agriculture production, droughts have a severe knock-on effect to the economy. Two successive years of drought led to a 0.7% decline in real GDP in 1999 and stagnation in 2000. Better rains during the 2000-01 growing season led to an estimated 6% growth rate in 2001. Over the long term, Morocco will have to diversify its economy away from agriculture to develop a more stable economic basis for growth.
The current government has introduced a series of structural reforms in recent years. The most promising reforms have been in the liberalization of the telecommunications sector. This process started with the sale of a second GSM license in 1999. In 2001, the process continued with the privatization of 35% of the state operator Maroc Telecom. Morocco has announced plans to sell two fixed licenses in 2002. Morocco also has liberalized rules for oil and gas exploration and has granted concessions for many public services in major cities. The tender process in Morocco is becoming increasingly transparent. Many believe, however, that the process of economic reform must be accelerated in order to reduce urban unemployment below the current rates above 20%.
GDP: purchasing power parity -
$105 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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