Economic Analysis of Morocco

1. 1
Prepared by Sec A Group 6
Abhay Sharma 1A
Aniruddh Srivastava 9A
Devansh Doshi 16A
Manasi Jain 23A
Sachin Gupta 38A
Vidooshi Joshi 55A

2. 2
Table of Contents
Kingdom of Morocco ..............................................................................................................................3
Morocco-Economic Environment......................................................................................................... 3
Morocco-Political Environment............................................................................................................ 3
Morocco-Social & Cultural Environment............................................................................................... 4
Morocco-Technological Environment................................................................................................... 4
Morocco-Ecological Environment......................................................................................................... 4
Morocco-Legal Environment................................................................................................................ 5
Macroeconomic Progress........................................................................................................................6
Economic Figures................................................................................................................................. 6
Growth................................................................................................................................................ 6
Macroeconomic Policy ........................................................................................................................ 7
Morocco Balance of Payments Summary ............................................................................................. 8
Morocco Current Account ................................................................................................................... 8
Morocco Unemployment Rate ............................................................................................................ 8
Morocco Industrial Production ............................................................................................................ 9
Morocco Consumer Price Index (CPI) ................................................................................................ 10
Morocco Inflation Rate ...................................................................................................................... 10
Macroeconomic Problems and Recommended Solutions..................................................................... 11
Problem Of Unemployment .............................................................................................................. 11
Policies to Reduce Unemployment .................................................................................................... 11
Problem Of High level of Current Account and Budgetary Deficit ...................................................... 12
Policies to reduce High CAD and Budgetary Deficit ............................................................................ 12
References............................................................................................................................................ 15

3. 3
KINGDOM OF MOROCCO
Kingdom of Morocco is located in the northwest of the African continent. It is bounded on the north by the Strait of
Gibraltar and the Mediterranean Sea, south by Mauritania, east by Algeria and the Atlantic Ocean. We would now
elaborate on the Political-economic-social-technological-ecological-legal aspects of Morocco.
Population 34,343,219
Capital Rabat
Official Languages Arabic,
Ethnicity Arab-Berber, Jews
Currency Moroccan Dirham(MAD)
1 Moroccan Dirham equals 0.12 US Dollar
Table 1.1 Demographics of Morocco
MOROCCO-ECONOMIC ENVIRONMENT
Morocco’s economy is relatively diverse. Key sectors include agriculture, tourism, mining, and textiles and apparel.
Through internal and Western Saharan mines, Morocco controls over 75% of world reserves of phosphates, which are
used in fertilizers—and of which the United States is the world’s largest consumer.
Remittances from emigrant workers, mainly in Europe, are another source of foreign exchange and a social safety net.
Morocco actively encourages foreign investment and trade, including through a Free Trade Agreement with the United
States and an Advanced Status agreement with the European Union. Morocco has a sound economic model which
combines openness, liberalization and newly introduced structural reform which has kept the economy going under
tough international and domestic conditions.
Agriculture sector, which employs almost half of the active population, accounts for 20% of the GDP. The sector is
extremely vital to the economy.
The main export commodities are clothing & clothes, electric machinery, inorganic chemicals, fish & other seafood.
Morocco’s two main import partners are the European Union and China.
USA
In 2006 Morocco entered into a bilateral Free Trade Agreement (FTA) with the United States; it remains the only African
country to have a FTA with US.
Europe
Morocco has close ties with the European Union (EU), although relations are occasionally troubled by issues of human
rights and the Western Sahara. The EU provides considerable aid and has been strongly supportive of Morocco’s political
reforms. France and Spain, Morocco’s former colonizers, have been its major bilateral donors, trading partners, and
sources of foreign direct investment
Morocco faced twin problems:
 Economic slowdown in Europe, which is the chief economic partner and importer
 Failed crop
The above two resulted in slowdown in growth to just 3.2% in 2012.
But apart from economy Morocco faces challenges on social life. From inequality and social disparity to very high
unemployment rates especially amongst young men and women is a big challenge for the state.
Uniqueness of Morocco
 More economic transactions with the EU than its neighboring countries.
 Special Strategic partnership with GCC (Gulf Cooperation Council), even though it’s not a part of the gulf
MOROCCO-POLITICAL ENVIRONMENT

4. 4
Morocco has had a relatively stable political environment since the 2011 revolution. The constitution was revised after
the demonstration by the people in Feb 2011. Under the new and revised constitution the parliament and the Prime
Minister were given more powers, however the King still remains the Head of the state and the "Commander of the
Faithful" as a direct descendant of the Prophet Mohammed. Morocco is a constitutional monarchy with an elected
parliament i.e. the head of the state is a monarchy. Morocco has a multi‐party system and parties must reach a political
consensus to be able to form a government coalition with the main parties: L’USFP, le PI, Le PJD, Le RNI. On 25
November 2011 the moderate Islamist Justice and Development Party (PJD) did best in the legislative elections by
winning 107 of the 395 seats to be filled. The new Prime Minister Abdelilah Benkirane (PJD) is recommending continuity
in economic policy. However despite the institutional changes, the power remains with a few elite. The Western Sahara
issue continues to hamper its relations with Algeria after the failed informal negotiation between Morocco and the
Polisario Front under the auspices of the United Nations (UN) in 2011.
MOROCCO-SOCIAL & CULTURAL ENVIRONMENT
Despite Morocco’s economic progress, the country suffers from high unemployment and poverty. Unemployment
(especially among young people), poverty, and illiteracy (especially in rural areas) remain high; according to the World
Bank, 8 million Moroccans, or one in four, live in “absolute poverty or under its constant threat.” Socioeconomic
hardships drive emigration and social unrest, and may be conducive to radicalization like Egypt and other Islamic states
in Africa.
Education in Morocco is free and compulsory through primary school (age 15). Nevertheless, many children –
particularly girls in rural areas – still do not attend school.
Morocco launched the INDH in 2005 to combat poverty in rural areas and social exclusion and insecurity in urban areas
through a participatory approach and by targeting the poorest communities.
Morocco, with a score of 25 is considered a collectivistic society. This means that people have a close long-term
commitment to the member 'group', be that a family, extended family, or extended relationships. People value relations
and business is run on relations. At a score of 70 on Hofstede’s Power Distance, Morocco is a hierarchical society. This
means that people accept a hierarchical order in which everybody has a place and which needs no further justification.
Hierarchy in an organization is seen as reflecting inherent inequalities existing in the society.
Morocco is primarily a Masculine state and emphasis is on performance and competitions where people try to outdo
each other. Also Morocco is classified as low on uncertainty tolerance.
MOROCCO-TECHNOLOGICAL ENVIRONMENT
Morocco has seen rapid development in the technological environment which has helped the state to drive up the
development and business. Morocco has had several reforms for Information and Communication technology in 1990’s.
The Moroccan government instituted a series of reform efforts that continued to build and leading up to the present-
day national ICT plan Maroc Numeric (Digital Morocco). This has helped Morocco be above its neighbors in terms of
technology. These were the steps taken by the government for enhancing the technological environment:
Expanding private competition and opting for an emphasis on technical requirements, innovation, quality, and access.
Programs to develop digital literacy among the older and rural population in addition to those that can effectively
cultivate a next generation of e-content and software producers and developers
Focusing on e-government and public service provision that is user oriented
MOROCCO-ECOLOGICAL ENVIRONMENT
Morocco has initiated measures to strengthen the ecological and environmental protection. These have been included
under the national charter for the environment and sustainable development (Charte nationale sur l'environnement et
ledéveloppement durable) since 2010. But there has been delay in implementation due to financial constraints. Also the
awareness and people participation is also low, thus the program has failed to bring about a big change.
Climate change has been taking place in Morocco which has led to droughts and downtrend of rainfall. But in 2012 the
efforts were increased after donations from EU. The government is also committed to improvement of water quality in
order to preserve the agro industry of the country.

5. 5
MOROCCO-LEGAL ENVIRONMENT
Judiciary of Kingdom of Morocco is an independent branch of Moroccan government. The legal system is mixed legal
system of civil law based on French law and Islamic law; Legislative power in Morocco is vested in the government and
the two chambers of parliament, the Assembly of Representatives (Majlis Al-Nuwab) and the Assembly of Councillors
(Majlis Al Mustahsareen)
A referendum was held in early July 2011 approving a new Constitution (post Arab Spring) which included the following
important reforms:
 The King now has the obligation to appoint a Prime Minister from the party that wins the most seats in
parliamentary elections; and the Prime Minister is the head of government and president of the Council of
Government with the power to dissolve parliament
 The Council of Government is in charge of preparing the general policy of the State
 The King retains complete control of the armed forces, foreign policy and the judiciary, as well as the power to
choose and dismiss the Prime Minister, and control over matters pertaining to religion

6. 6
MACROECONOMIC PROGRESS
ECONOMIC FIGURES
Over the past few years the economy of Morocco has been characterized by a stable macro economy, low inflation rate
and a relatively slow growth. The government continues to enact several and multi-sector reforms and pursues the
liberalization of the economy in order to stimulate growth and create new jobs. The 4% growth in 2010 was due to the
rebound of the tourism sector, the immigrants’ remittances (transfer of funds) and also the performance of non-
agriculture sectors. The Gross Domestic Product (GDP) in Morocco expanded 4.5 percent in the third quarter of 2013
over the same quarter of the previous year. The government is putting serious efforts to diversify the economy away
from the agriculture sector, which is very dependent on weather conditions and its instability. From 1999 until 2013,
Morocco GDP Growth Rate averaged 5.9 Percent reaching an all-time high of 14.2 Percent in March of 2008 and a record
low of 0.5 Percent in December of 1999. Morocco is the fifth largest economy in Africa. Considerable attention has been
given to the development of off-shoring services. The GDP growth rate is having difficulties to stabilize. However the
strong economic fundamentals along the country’s increasing investment attractiveness put Morocco despite the
financial crisis, in a position projected to grow during the next coming years. A growth that however remains insufficient
to reduce the high unemployment rate (10%).
The fact that the budget deficit can be relatively supported, gives the country credit credibility in international markets.
Table 2.1 Morocco GDP Growth Rate
GROWTH
Growth has been driven by capital accumulation and domestic demand. On the supply side, growth has been mostly
driven by strong capital accumulation. Over the period 2002-2012, the contribution of capital accumulation has been
close to 45 percent. Labor has been the second factor providing the largest contribution (about 40 percent) while human
capital and total factor productivity (TFP) accounted together for less than 15 percent. However, while the contribution
of human capital has been rather constant, TFP’s contribution has markedly increased, reaching about 20 percent over
the past decade. On the demand side, growth has been exclusively driven by domestic demand (consumption
contributing to about 75 percent and investment to about 35 percent). In contrast, net exports have decreased during
the past decade, resulting in a negative growth contribution of external demand (about -10 percent).
7.4
3.2
4.9
2.7
4.85.3
3.6
4.5
2.2
5.1
12.4
5.7
3.4
5
2.7
7.3
9.1
2
4.9
2
0
2
4
6
8
10
12
14
16
2008 2009 2010 2011 2012 2013
Morocco GDP Growth Rate
Percentage Change in Gross Domestic Product
Q1 Q2 Q3 Q4

7. 7
Table 2.2 Growth Indicators comparison over the years
MACROECONOMIC POLICY
Fiscal Policy
In a difficult economic context, mainly related to the international crisis, Morocco has chosen an expansionist fiscal
policy to support domestic demand. Since 2002 the fiscal balance has been through three phases: a reduction of the
deficit up to 2006, followed by two years with a small surplus and then a countercyclical period since 2009. At the end of
2012, the budget deficit reached 7.5% of GDP but should be reined back to 5.3% in 2013. To this end a number of steps
are planned to increase public revenues. The tax reforms embarked upon several years ago should be continued. These
include widening the tax base, strengthening tax administration and elimination of non-productive tax breaks, to
improve the net contribution of public institutions and businesses and to get better value from the state’s private
domain. In addition, with a view to containing public spending, the government plans to pursue its program to
rationalize the state’s life style, strengthen public-private partnerships, reform the Organic Law relating to Finance Law,
and speed up reform of public procurement. State investment should continue in 2013, reflecting the determination of
the authorities to maintain their backing for economic activity.
Monetary Policy
Inflation, measured by changes in the consumer price index (CPI), remained at a relatively moderate level in 2012, rising
to 1.8% at the end of October. For the whole of 2012 forecasters predict inflation slightly above 1.3%. This inflationary
control is the result of a monetary policy that targets inflation and of government intervention. The annual rate of
growth of the money supply, as measured by the M3 aggregate, slowed at the end of October, increasing by 3.6%
compared with 5.0% the previous year. This reflects a fall in short-term deposits and a lower rate of growth of current
accounts, together with a greater fall in the monetary assets of private non-financial companies, as well as a slower rate
of growth of household assets. The annual growth rate of bank loans also slowed slightly, from 7.0% in 2011 to 5.4% at
the end of October 2012. The Moroccan dirham (MAD) is pegged to a basket of currencies dominated by the euro (EUR)
and had appreciated against the euro by 1.0% and fallen by 4.6% against the US dollar (USD) at the end of October 2012
compared with same period in 2011.
MOROCCO BALANCE OF PAYMENTS SUMMARY
Table 2.3 Balance of Payments Summary

8. 8
Morocco recorded a trade deficit of 14,722 MAD Million in November of 2013. Balance of Trade in Morocco averaged -
8767.43 MAD Million from 1998 until 2013, reaching an all-time high of -1,254.60 MAD Million in January of 1999 and a
record low of -22921 MAD Million in May of 2012. Phosphates and textiles are central to Morocco's export industry.
Other exports items include electric components, inorganic chemicals, transistors, citrus fruits, vegetables, and fish.
Morocco main exports partners are European Union countries with Spain, France and Italy being the most important.
Morocco imports crude petroleum, textile fabric, telecommunications equipment, wheat, gas and electricity, transistors,
plastics. Its main imports partners are: France, Spain, China, Italy, Germany, United States and Saudi Arabia.
MOROCCO CURRENT ACCOUNT
Table 2.4 Current Account Balance as a percentage of GDP over the years
Table 2.5 Current Account Balance over the years
Morocco recorded a Current Account deficit of 24,920.80 MAD Million in the second quarter of 2013. It averaged -
4691.42 MAD Million from 2001 until 2013, reaching an all-time high of 11697 MAD Million in the third quarter of 2002
and a record low of -28726.70 MAD Million in the second quarter of 2012.
MOROCCO UNEMPLOYMENT RATE
Unemployment Rate in Morocco increased to 9.10 percent in the third quarter of 2013 from 8.80 percent in the second
quarter of 2013. From 1999 until 2013, Morocco Unemployment Rate averaged 10.7 Percent reaching an all-time high of
7265.8
-3392.3 -527.9 -1451.6
-6958.3
-12769.5
-7503.9
-17865.9 -18176.5
-8184.9
-16515.7
-22414.1
-5676.9
-7749.7 -7096.6
-15327.3
-20602.3
-17420.8
-9001.6
-13419.8
-16456.6
-20013.2
-28726.7
-24920.8
-35000
-30000
-25000
-20000
-15000
-10000
-5000
0
5000
10000
2008 2009 2010 2011 2012 2013F
Morocco Current Account
(MAD million)
Q1 Q2 Q3 Q4

9. 9
15.1 Percent in September of 1999 and a record low of 7.8 Percent in June of 2006. On the whole, the growth rate of the
economy will not reduce the unemployment rate significantly, also taking account of the constant rise in the number of
first entrants on the labor market. Urban areas saw particularly strong job growth, and the services and construction
sectors were the two leading drivers of job creation. Services generated some 152,000 new jobs, with the business
process outsourcing (BPO) and telecoms sector proving particularly dynamic. Meanwhile, government infrastructure
projects, as well as heavy private investment in real estate and tourism helped boost the construction sector, which
created 80,000 new jobs in the second quarter of 2013.
Table 2.6 Unemployment rate as a percentage of Labor force over the years
MOROCCO INDUSTRIAL PRODUCTION
Industrial Production in Morocco increased 0.50 percent in the third quarter of 2013 over the same quarter in the
previous year. Industrial Production in Morocco averaged 3.22 Percent from 2000 until 2013, reaching an all-time high
of 9.40 Percent in the first quarter of 2000 and a record low of -4.40 Percent in the fourth quarter of 2008. In Morocco,
industrial production measures the output of businesses integrated in the manufacturing sector of the economy.
Table 2.7 Industrial Production Growth of Morocco
9.6 9.6 10
9.1
9.9 9.49.1
8 8.2 8.7
8.1
8.8
9.9 9.8
9 9.1 9.4 9.19.5 9 9.2
8.5 8.7
0
2
4
6
8
10
12
2008 2009 2010 2011 2012 2013F
Morocco Unemployment Rate
(% of Labor Force)
Q1 Q2 Q3 Q4
-1.6
0.6
2.6
3.7
-0.7-1
1.8 2.1
1
0.2
1.5
-0.3
2.6
1.7 1.5
-4.4
4
2.9 3.3
0.2
-6
-4
-2
0
2
4
6
8
2008 2009 2010 2011 2012 2013F
Morocco Industrial Production
Q1 Q2 Q3 Q4

10. 10
MOROCCO CONSUMER PRICE INDEX (CPI)
Consumer Price Index (CPI) in Morocco decreased to 113 Index Points in November of 2013 from 113.70 Index Points in
October of 2013. Consumer Price Index (CPI) in Morocco averaged 108.26 Index Points from 2007 until 2013, reaching
an all-time high of 113.70 Index Points in October of 2013 and a record low of 101.20 Index Points in February of 2007.
Table 2.8 CPI of Morocco over the years
MOROCCO INFLATION RATE
The inflation rate in Morocco was recorded at 1 percent in November of 2013. Inflation Rate in Morocco averaged 1.79
Percent from 2008 until 2013, reaching an all-time high of 5.20 Percent in May of 2008 and a record low of -1.60 Percent
in December of 2009.
Table 2.9 Inflation Growth Rate of Morocco over the years
98
100
102
104
106
108
110
112
114
116
2008 2009 2010 2011 2012 2013F 2014F
Morocco Consumer Price Index(CPI)
-3
-2
-1
0
1
2
3
4
2008 2009 2010 2011 2012 2013F 2014F
Morocco Inflation Rate
Annual Change in Consumer Price Index

11. 11
MACROECONOMIC PROBLEMS & RECOMMENDED SOLUTIONS
PROBLEM OF UNEMPLOYMENT
Overview
Morocco's unemployment rate, a cause for concern, though has been dropping steadily in 2008, on the back of job
growth in services and construction but on the whole, the growth rate of the economy will not reduce the
unemployment rate significantly, also taking account of the constant rise in the number of first entrants on the labor
market. According to the World Bank, 8 million Moroccans, or one in four, live in “absolute poverty or under its
constant threat.
With 30.5% of Morocco's population of 34.3 million aged 14 or younger, according to the EIU, job creation for the young
is one of the government's major priorities. 2013 data indicate that 17.6% of those in the 15–24 age group are
unemployed. This rises to around one third in urban areas—rural communities often employ the young in agriculture,
including on the family farm, as soon as they leave school, contributing to relatively high youth employment rates.
Consequences of High Unemployment
1. Low level of Production and High Poverty
With consistent high level of unemployment (~ 9%), consumer spending has decreased over the period which has led to
a sluggish growth in economy, as 3.2% growth in 2012 makes it impossible to reduce high level of employment. Weaker
tourism revenues and export demand, especially from Europe which accounts for 60% of trade, has been drag on
growth in recent years. Apart from this, cost of living has become unbearable to most of the sections of society.
2. Socioeconomic Hardships
Socioeconomic hardships like high level of unemployment drive emigration and social unrest and can be conducive to
radicalization. Though the Govt. has attempted to address discontent through social programs, subsidies etc. but it has
taken a toll over the Morocco’s economy. Regional instability and social unrest has brought about a decline in investor
confidence and highlighted many social issues.
POLICIES TO REDUCE UNEMPLOYMENT
Fiscal Policy
As Morocco has chosen an expansionist fiscal policy to support its domestic demand, it can start tax reforms which were
embarked years ago. With the widening of tax base and strengthening of tax administration, Govt. can increase its
revenue and thereby can provide Job Opportunities and unemployment allowance, which is indeed a redistribution of
income.
Also, Govt. should seek to attract Foreign Investment into priority sectors like textiles,
electronic components, Offshore Services and Tourism (a highly labor-intensive sector) and thereby helping to reduce
unemployment.
Monetary Policy
In the absence of any real inflationary pressures, the Central bank can increase money supply (M3) to boost the
borrowing and hence the investment, which will help in reducing unemployment and attaining high growth level.

12. 12
Also, the Central bank can increase the Expected Inflation, by announcing its measures and policies well in advance. It
will lead to proponents of Expected inflation to believe the central bank policies. With the increase in expected inflation,
it is quite possible that Inflation will increase in coming years according to Modified Philips Curve and because of
counter-cyclical relationship between inflation and unemployment, higher the inflation will decrease the
unemployment rate in the economy.
Apart from above, since Agriculture contributes 20% of GDP and employs 40% of total labor force, Govt. can introduce
favorable policies (fertilizer Subsidies, loan waivers to farmers) to strengthen this sector.
PROBLEM OF HIGH LEVEL OF CURRENT ACCOUNT AND BUDGETARY DEFICIT
Overview
With the sharp rise in imports of oil, vehicles and general purpose equipment, it shows the country’s inability to meet
some of the consumer needs through Domestic production and thereby leading to worsening of trade balance. In 2012,
current account deficit amounted to 8.6% of GDP. Rate of coverage of imports by exports fell to 48%.
Rising prices of raw material in the world market made it necessary for Morocco to emphasize on domestic demand to
counter the effect of declining demand from abroad. This in turn, led to worsening of Budget Deficit and recourse to
foreign debt. In the beginning of 2013, treasury debt had deepened to 58% of GDP.
Worsening of Budget Deficit (7.5% in 2012) and Current account deficit (8.6% in 2012) led the credit agency S&P
(Standard and Poor) to downgrade it’s rating of country’s long term debt from Stable to Negative, which is a setback to
the potential investors and Morocco’s planning of raising capital through Debt.
Consequences of High Current Account and Budgetary Deficit
1. Low level of Investor Confidence
Rise in current account deficit and budgetary deficit led to credit agencies like (S&P, Fitch or Moody’s) downgrading the
country’s investment grade or increasing the credit risk on Govt. issued Bonds, which had happened in Morocco’s
economy when S&P lowered its long term debt rating from positive to negative. Downgrading of Investment Grade
makes it very difficult to attract investors, which has led to low job opportunities and lower growth in economy.
2. Restrictions in gaining funds from International Bodies
High level CAD also posed hurdles for Morocco in gaining monetary funds from bodies like IMF, World Bank at cheaper
cost, which led to Govt. inability to perform social sector reforms like increase in allowance or subsidies to the needy,
which in turn had led to high income disparity over the years. Also, it restricted the Govt. ability to increase the
investment in various sectors to create different job opportunities for people.
POLICIES TO REDUCE HIGH CAD, BUDGETARY DEFICIT
1. Boosting Exports and Introduction of Economic Reforms
Govt. should emphasize on boosting exports by providing perks like preferential treatment, Tax Benefits. Also, reforms
in Automobile sector, Pharmaceutical, Aeronautical, Food processing, electronics etc. will help in gaining foreign
investment and boosting of demand.
Morocco’s main industries like Textile and Leather, which had fared less well in recent past due to weak demand in
Europe and a strong competition from Asian textile producers, should try to seek newer markets of Latin America and
should develop competitive strategies to overcome the threat from Asian producers.
Also, country should look towards reducing imports of non-essential products like food and consumer goods and
develop alternative source of energy to reduce the dependency on Oil imports, which accounts for 40% of total imports.

13. 13
Though recently Govt. had cut the petrol and diesel subsidies and reduced tax exemptions, especially in agriculture
sector but at the same time fiscal discipline should not be allowed to translate into a weakening of social protection
for the most vulnerable groups, or come at the expense of investment in infrastructure, education and health.
Apart from these, Govt. can look forward to legalize cannabis cultivation as Morocco is currently the leading producer
and exporter of cannabis in the world, responsible for 42% of the global supply and can make the crop available for
therapeutic and industrial use, which in turn will help in reducing the CAD.
2. Tax Evasion Amnesty
Morocco has a long history of tax evasion and is a rampant phenomenon here. According to the US based Political
Economy Research Institute (PERI) tax evasion from 1970 to 2012 period amounted to US $89bn, equivalent to
US$2.1bn per year. Govt. can provide tax amnesty by applying a one-time penalty on its citizens or corporations and
guarantee their anonymity and protection from prosecution.
It will help the Govt. to provide a one-off boost to public revenue as well as improving liquidity in the domestic banking
system. Repatriation of foreign assets would help revitalize Morocco's economy and increase the country's reserves in
foreign currency, which in turn reduces the CAD & budgetary deficit from as high as 7.5% of GDP.
3. Revival of Tourism Sector
As the tourism sector contributes around 7-8% of GDP, Moroccan Govt. should emphasize on revival of this sector.
Policies like Visa on Arrival, increasing number of flights between the countries like Saudi Arabia and Gulf countries
which have high per capita income can boost the tourism sector.
Also, Morocco can benefit from serious political turmoil in countries like Egypt, Tunisia etc. By diversifying the source
of foreign visitors and active marketing campaign can help the Govt. in reviving this sector. Though the number of
tourists visiting Morocco in Jan-Sept period totaled 7.8mn, which is 10.4% increase on a year on year basis but the tight
grip on spending led to just 1% increase in revenue, after contracting 1.4% in previous year (2012). Indeed, taking into
account inflation of 1.7% in the 12 months ending in September, it actually represents a reduction in tourism receipts in
real terms. In this way, Tourism sector revival can help Govt. in bridging CAD and budgeted deficit.
4. Monetary Policy
Since the Moroccan economy is embroiled with High CAD and High Budgetary deficit, Central Bank of Morocco can
implement Expansionary Monetary Policy as it can bear a slight increase in inflation given that it is at a record low. With
the Expansionary Monetary Policy, money supply (M3) will increase in the economy and as a result Interest rate will
come down and as a result Investment will increase as well as the Net Export. Increase in Net export can significantly
reduce the CAD.
Also, with the increase in investment, GDP will increase (i.e. increase in production level), which in turn will reduce the
unemployment and will increase the Disposable income. Increase in Disposable income will lead to higher spending by
the public and higher Govt. revenues. In this way, Central Bank of Morocco can help in reducing the Budgetary Deficit.

14. 14
REFERENCES
1. web.worldbank.org
2. imf.org
3. tradingeconomics.com/morocco
4. economywatch.com
5. africaneconomicoutlook.org
6. wikipedia.com
7. elibrary-data.imf.org/ (IMF e-Library)
8. www.ilo.org/global/statistics-and-databases/
9. www.economist.com (Economist)
10. www.cmie.com
11. www.hrw.org human rights watch
12. www.fas.org/ federation of American scientists
13. unctad.org/en/PublicationsLibrary/aldcafrica2013_en.pdf
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