Morocco political, social and economic analysis

Introduction 3rd Country Presentation ………………………………………………………….…… 3 political speeches Three economic briefs Balance of Payments Current trade trends 8 Trade Composition 8 Exports 8 Imports 8 comparative advantage ……………………………………………………………… 8 commercial destinations 10 trade regulations ………………………………………………………………………… 12 recent trade disputes 13 FDI Trends …………………………………………………………………………..….. 14 Portfolio Investment Trends ………………………………………………………… exchange rate policy 18 ………………………………………………………………..….. 19 Nominal and real exchange rate trends ………………………………………….….. 20 Financial situation (exchange rates and debt crisis) ……………………………………...… 22 Finally, ……………………………………………………………………………….22
Morocco's political, social, and economic analysis
Presentation of the Country
Morocco is one of the countries located in northern Africa. It is one of the Maghreb countries.
The country covers 446.550 square kilometers. Morocco is famous because of its unique cities which include Casablanca and Marrakech. Rabat is the capital city of Morocco. Tamazight and Arabic are the two major languages that are spoken in Morocco where Tamazight is the only language spoken in central Morocco. French language is only used during diplomacy, business or political situations. Currently, the country's population stands at 33.5 million people and it is ranked the 9th out of 54 African countries in terms of population.
political presentation
In politics, Monarchical regime exists in this country where a king rules the nation. By definition, a monarchical regime is a situation where a state or a country is governed, ruled and directed by a queen or a king (monarch). Up to July, 30th 1999, morocco was under the rule of King Mohammed VI. The country also is governed be a government head. For instance, the country's government head is Abdelilah Benkirane who took the government in November, 29th 2011.
Briefs on Economic status of Morocco
Growth in Gross Domestic product (GDP)
A country's GDP is the increase of the economic capacity in the production of services and goods when comparing it from one time period to another. The histogram below represents a summary of Moroccan fluctuating GDP from 2010 through to 2015.

Figure1: Growth of GDP of Morocco
Sources: data obtained from World Data Bank Development Indicator, (n. d.) The World Data Bank.
Note: the X axis represents the growth in GDP of Morocco and the Y axis represents years.
In the year 2015, the Moroccan GDP stood at $ 100.593 billion but from the above diagram, it can be seen that growth of Moroccan GDP fluctuated in 2010. This shows that the country's economic growth was growing slowly during this year. There is no constant growth of the country's GDP and this is evidenced from the graph above. In 2011, the country recorded the highest economic growth but the year that followed (2012) it went down. The lowest GDP growth was recorded in the year 2014. The sequence of the GDP growth in Morocco is that if the current year's GDP growth is high, it is expected that the following year, it will decline. It should be noted that the fragmented coalition government that Saadeddine ei-Othmani (prime minister) will slow down but it is projected that the real GDP will grow by 3.6% by 2018. The Economist, (2017)
Country's inflation
A country's inflation is a representation of rising levels of prices of goods and services. Price levels are defined as price averages given the money value. Consumer price measure is used in evaluating a country's inflation. In this context, Consumer Price Index (CPI) gives a measure of average prices consumers in urban areas pay in acquiring the fixed consumer's basket of services and goods. This can be represented by the formula below.
CPI =
Currently, the Consumer Price Index stands at 118.70 points.

Figure 2: Inflation rate fluctuations in Morocco
Source: data obtained from World Data Bank Development Indicator, (n. d.) The World Data Bank.
Note: the X axis represents annual inflation growth in percentage while the Y axis represents the years under study.
From the graph, inflation rate was increasing from 2011 to 2013 when it the highest. In 2014, inflation rate dropped in its lowest. This was a data that was collected between 2010 and 2015. In 2017, the month of September, consumer prices increased by 0.4% where in October the same year, inflation rate increased by 0.3%. Goods and services in the hotel industry increased by 3.3% in September compared to 1.3% in October. In the clothing industry, inflation increased by 1.6% compared to 1.5% in the month of October. In education, housing, transport, and furniture, their inflation rate seemed to be constant in the year 2017. Trading Economics, (2017). In general inflation rate of Morocco between 2008 and 2017 averaged at 1.43% where in 2008 it recorded a high inflation rate of 5.2% and in 2009, December, it recorded a low inflation rate of -1.6%.
Country's Unemployment rate
Unemployment rate in Morocco is a measure of the number of citizens of the age of 18 seeking for employment expressed as a percentage of labor force. Between the years 1999 to 2017, the highest inflation rate recorded was 15.10% and the lowest inflation rate that was recorded was 7.80%. On average, the unemployment rate in Morocco is at 9.30%. The country is trying to reduce this figure into the manageable levels. For instance, the textile sector is undergoing growth to reach international levels, therefore, increasing employment rate by 42% International Labor Organization, (2006).

Figure 3: Graph of Unemployment rate in Morocco
Source: data obtained from Trading Economics. (2017) Morocco unemployment rate.
Note: the X axis represents semi annual rate of inflation growth
Morocco's Balance of Payment
By definition, balance of payment is basically a calculated summary regarding every transaction conducted by a given state or an economy with other states in the globe within a given period of time. Below is a graph that provides a summary of balance of payment in Morocco between 2010 and 2015.


Figure 4: balance of payment in Morocco between 2010 and 2015.
Source: Data obtained from Knoema. (2017) World data Atlas. Morocco: Balance of Payments.
Note: the X axis represents the Balance of Payments in Billions of U.S dollars whereas the Y axis represents years.
From the graph above, a deficit was realized Morocco account which was highest in 2008. The reason for this deficit came about from the global financial crisis that was experienced in the year 2008. The deficit implies that exports were exceeded by imports. In the year 2012, an improvement in the current accounts of the country started improving, and this was as a result of a general increase in exports. In 2016, there was a slow growth in GDP due to contractions in the agricultural sector International Monetary Fund, (2017). It should be noted that even if there was an improvement in exports, it remained negative because it did not exceed imports. In the year 2015, the graphs became stiff approach positive figures. This was an indication that its exporting was improving, and shortly it will exceed imports. This is also an indication that Morocco is developing very fast and its interaction with other nations is an opportunity to export more.
On the other hand, Morocco's financial account was also negative like the current accounts. The financial account is the financial assets' flow in the financial markets. This indicates that the country's investors and citizens are purchasing more assets to the country than the assets transported to other nations from the country.
3. Current trade trends
Morocco was ranked as one of the countries that are performing well concerning exports in the recent years. From the graph, we can see the gap between imports and exports is reducing meaning that the country is trying to manufacture more to offsets its deficit. The current account, as well as the financial account, has very stiff graphs approaching positive figures. This shows that the trade trend in the country is maturing. As the country is trading on a deficit, it means that the country is developing.
4. Trade Composition
4.1 Exports
In the year 2015, Morocco was at number 64 in the globe given the export business. Morocco exports machines (value of exports amounted to $4.39 billion), cars (value of exports amounted to $3.43 billion), mineral products such as phosphate (the value exported amounted to $2.54 billion, as well as the textile (value of exports amounted to $4.48 billion).
4.2 Imports
In the year 2015, the total amount of imports amounted to $36.7 billion which placed Morocco at number 56 given the world's largest importers. Morocco's main services and goods it imports includes minerals such as fuel (value imported amounted to $6.69 billion), vehicles (value imported amounted to $1.59 billion), machinery (value imported amounted to $7.06 billion, as well as food products (value imported amounted to $2.03 billion).
Below are the graphs that summarize imports, exports and traded services and goods (net)


Figure 5: summary of Morocco's exports
Sources: World Data Bank Development Indicator, (n. d.) The World Data Bank.

Note: the X axis represents the value exported in Billions of dollars while Y axis represents the years under study.

Figure 6: Summary of Morocco's Imports
Source: Data obtained from World Data Bank Development Indicator, (n. d.) The World Data Bank.
Note: the X-axis represents the value imported in Billions of dollars while Y-axis represents the years under study.
The country's net trade in services and goods is the same as the country's net of services and goods exported. Net exports are computed by subtracting imports from exports. From 2010 through to 2015, the net exports remained negative. This was an indicator showing that Morocco is an importing country (it exports less than what it imports) and this brings to our understanding that economically Morocco is developing.
The graph below summarizes net trade situation in Morocco from 2010 to 2015. Figure 7: summary of net trade situation in Morocco from 2010 to 2015
Source: Data obtained from World Data Bank Development Indicator, (n. d.) The World Data Bank.
Note: the X axis represents the net trade value in Billions of dollars while Y axis represents the years under study.
4.3 Comparative advantage
Morocco is one of the African countries that are trying to venture into automobile industry for PSA and STELLA projects. The industry is giving the country has boosted the economy a lot, and it is bringing a balance of payment into balance. This is the main competitive advantage that has that has put it ahead of other African countries. The only set back that it has include production of goods and services that come with added value such as medical instruments like x-rays, compasses, and cameras. These services and goods require specialized personnel, materials, and operators. These products are only produced by developed countries, and Morocco cannot compete with this states. The only option for Morocco is to import these goods and services.
5. Trade destination
Morocco's exports
The main partner that Morocco trades with regarding exports is none other than Spain. This is because Spain is the only developed country that is near Morocco. The proximity is evidenced by one and a half hour spent in crossing to Spain from Tangier. This means that exporters and importers spend less regarding transportation costs while transporting goods. Melilla and Ceuta join Spain in trading with Morocco.
France Consumes about 17% of the goods exported from Morocco. There is a good and long-term relationship exercised by the two countries. This relationship is traced back to colonization where Spain and France colonized the country. France used assimilation method of colonization where it wanted Moroccans to be like them in the year 1912. The language that is official in Morocco is French which shows that there is a good relationship between the two nations.
Morocco's imports
From the year 2000, Morocco has been part of the Euro-Mediterranean agreement which provides for a free-trade region that liberalizes a two-way trade on industrial services and goods which included tariff-free trade. This becomes the reason why Europe is the main region where services and goods originate from which Morocco imports. Morocco is, therefore, strategically placed in accessing the European market and imports the necessary goods and services.
6. Trade regulations
Tariffs
Morocco is part of (Free Trade Agreement), but it has imposed tariffs on importation, on most services and goods. The tariff that is on the highest side goes as high as 35% inclusive of the surtax of 15% on imported goods. Besides, tax ranging from zero to 20% is added on imports value. In Morocco's Mediterranean frontier called Tangier, free-trade is exercised that makes transactions of local and foreign business community easier. Duties are reduced on products imported as well as defective goods to be assembled in the country.
Taxation
In Morocco, the tax code that is exercised relies on three scenarios, namely;
i) Commercial, industrial, professional and artisanal operations that are exercised in the country,
ii) Operations related to imports
iii) Operations exercised by individuals not regarded as Non-Entrepreneurial State who acts occasionally or habitually, not taking into account their form, nature or status of legal matters, or their way of interventions.
The recommended Value-Added Tax (VAT) in this country includes;
i) 20% as normal rates
ii) 14%, 10%, and 7% as reduced rates
Specified rates include;
i) Alcoholic drinks and wines delivery and sales placed as 100 MAD per Hectoliter
ii) Sales, as well as deliveries of all items made of gold, silver or platinum, are taxable except tools made from these minerals, they are taxed as 5 MAD per gram of platinum or gold, and silver will be taxed as 0.10 MAD per gram.
Para-fiscal taxes
All exports will undergo technical inspection, economic and promotions on exports, industrial developments and production in small scale. These activities will be financed by 25% of the imports. Those activities excepted from this kind of tax include;
i) Special procedures in customs or concessions provided on approved programs on investments.
Ii) Special approved regulations and legislative state provisions
iii) Relief or exemptions from importation taxes and duties give the provided legislation and regulations.
IV). Trade agreements' preferential provisions between other nations and Morocco.
7. Recent Morocco's trade conflicts
During trading activities between Morocco and other European nations, misunderstandings and difficulties arise between them. This means that many recorded conflicts are related to transactions between Europe and Morocco. In the year 2015 for instance, 2012's Morocco-EU farm trade agreement's annulations concerning agricultural goods was passed by CJEU (Court of Justice of European Union) after Polisario Front's request. Polisario Front has been reclaiming Sahara's independence for several years, and since the west of Sahara had been included in that agreement, there was a clear precision that the whole of Sahara be included and be interested in the deal.
For sure, CJEU decided that there was no appropriated examination by Europe's council concerning natural resources' exploitation. This meant that the said exploitations were exercised for profits and not for the Sahrawis people living in the Sahara. For this reason, a conflict arose, and Morocco suspended all the businesses and relationships it had with European countries concerning products that came from agricultural practices. Europe pleaded for an appealed the case and the agreement's annulations were found to be invalid by CJEU's general avocado. The trade agreement was finally canceled since the Morocco - EU free exchange was irrelevant to West of Sahara.
The second conflict was also realized concerning overflowing of immigrants from Europe. Morocco confirmed that this migratory flow was uncontrollable if the differences that existed between the European Union and the country concerning agricultural goods were not resolved and settled. As at February, 17th, 2017 it was recorded that about five hundred migrants forced themselves to Ceuta through the borders Morocco and Spain routes. Immigrants from Morocco reside primarily in France, Italy and Spain OECD, (2017). This high level of migrants from Morocco to Spain has been termed as unfavorable by the government of Spain, and this will cause a conflict between Morocco and Spain.
8. Foreign Direct Investments (FDI) in volumes
It is said that the high levels of FDI to Morocco from Europe will help the country develop very fast be ahead of other African countries Lahsini. (2017). Although in the year 2016, the country received less FDIs it is one of the targeted countries in West Africa. The decline was recorded as 29% drop in the year 2016 brings the figure to $2.3 billion from $3.2 billion in 2015.
Some of the FDIs that have been realized in the country include the South Africa's Sanlam that acquired Saham finances at the cost of $375 million (30% stake). Another FDI involved OCP group from Ethiopia that took over fertilizer factory construction in Morocco at a cost of $3.7 billion (World Trade Organization, 2016). Morocco has come up with laws on investment which centralizes promotions on investment practices in Investment and Export Agency of Morocco and come up with EPZ (Export Processing Zones) in the country's major areas.
Below is a graph that will summarize FDI net outflow and inflow over the years 2010 to 2015.

Figure 8: Morocco's outflow and inflow of FDI
Source: data obtained from World Data Bank Development Indicator, (n. d.) The World Data Bank.
.
Note: The X axis represents the Morocco's GDP in % while the Y axis represents the years under study.
Trends in portfolio investments
The graph below shows Morocco's resources given in percentage.

Figure 9: Morocco's resources given in percentage.
Source: data obtained from Lahsini, C. (2017) UNCTAD: Foreign Direct Investment in Morocco fell by 29% in 2016. Morocco World News. Morocco.
Inward FDIs
From the above graph, it can be depicted that international investors are interested and sensitive on investments related to real estate sector which takes a greater portion of about 22%. This is because the sector is not expensive in Morocco and the country is known for its outstanding architectural knowhow especially in Marrakech and Riad. Increasing tourism in the country also is a boost to inward direct investments on the sector because real estate constructed and owned are for rentals by tourists. Other natural resources such as special oil called Argnier and natural gases are a source of attraction for businessmen and investors who intend to earn more money by exploiting these resources.
Outward FDIs
The table below shows a summary of Moroccan Companies that have interests abroad in the period between 2003 and 2015.
RANK CORPORATION PROJECTS CREATED JOBS COST ($ MILLION)
1 Douja Promotion Groupe 8 6,085 2,635
2 BMCE Bank 39 603 1,060
3 Banque Centrale Populaire 18 265 586
4 Office cherifien des phosphates (OCP) 4 486 519
5 Attjariwafa Bank 9 311 203
6 Sakanid 2 358 74
7 Euro Maghreb services 1 60 50
8 Royal Air Maroc 2 22 40
9 Koutoubia 1 100 28
10 Groupe Tazi 2 153 18
Other corporations 13 728 71
Total figure 99 9, 171 5, 282
Figure 10: summary of Moroccan Companies investing abroad
Source: data from World Data Bank Development Indicator, (n. d.) The World Data Bank.
.
The table above has ranked corporations according to their general performances. The sector of banking dominates the ranking table. Attijariwafa, BMCE bank and Banque Centrale represents this performance. The real estate has the highest cost of about $2, 640,000.
The graph below shows the Net Portfolio Investment in Morocco

Figure 11: Net Portfolio Investment in Morocco
Source: Data from World Data Bank Development Indicator, (n. d.) The World Data Bank.
.Note: the X axis represents the current Net Portfolio Investment in $ millions while the Y axis represents the number of years under study.
Morocco's total reserve
One of the most significant exporters of phosphate is Morocco. In fact, it reserves ¾ of the world's phosphate. But from the above graph, between the year 2011 and 2012, there was a stiff decline in the total investment because Resource Governance Index came up with assessment restrictions in the sector of phosphate that undermined its trade. As from 2012 onwards, there was an increase in the total net portfolio investment. This was so because the country succeeded in rediscovering the sector's equilibrium where rational courses of action were resumed.
Net Portfolio Investment
In the year 2011, the graph dropped dramatically in the year 2011, and this happened because there was a global economic crisis in the year which affected Morocco. Besides, Morocco was one of the victims affected indirectly by Arab Spring (political instability) that affected neighboring counties especially Egypt and Tunisia. This situation scared away investors who believed that the whole western region was affected where Morocco was one of them. By 2013, everything had been resumed to normal as represented by the stability of the graph.
10. Exchange rates policy
By definition, exchange rate refers to one currency's price about another currency. This rate is determined by the market where foreign exchanges are done. The official and dominant currency in the Republic of Morocco is called Dirham, and it is represented by a code designed as MAD. For understanding purposes; 1 euro is equivalent to 11 Dirham whereas $1 is equivalent to 10 Dirham.
In date 25th April 2001, Morocco changed the system and policy of exchange rate into a fixed exchange rate system. This procedure is pegged on the value of rates a government decides to impose using the central bank. This policy is only achieved through direct interventions in a market where foreign exchange is practiced. The reason behind this policy is to curb unregulated and severe supply and demand forces. The Moroccan currency and the economic fluctuations are depended on trade as well as capital flows from foreign states especially U.S and Europe. Through the adoption of the policy of fixed rate o exchange, the country has powers to manage its currency as it wants to its advantage. The policy can also be used to maintain the currency's stability during economic fluctuations.
The graph below represents the official rates of exchange
Figure 12: official rates of exchange
Source: data from World Data Bank Development Indicator, (n. d.) The World Data Bank.
Note: the X axis represents the LCU / Dollar, period average whereas the Y axis represents the year under study.
From the above graph, there was no big range for all the years but it was seen that in the year 2015, Morocco obtained 9.80 LCU / dollar which was the highest.
Nominal and real exchange rate trends
Real exchange rates
The graph below shows Morocco's real effective rates of exchange

Figure 13: Morocco's real effective rates of exchange
Source: International Monetary Fund
Note: the X axis represents the Index based on 2010 = 100 whereas the Y axis represents the year under study.
The graph below represents the nominal rates of exchange

Figure 14: nominal rates of exchange
Source: International Monetary Fund
Note: the X axis represents MAD / Euro whereas the Y axis represents the year under study.
In the two graphs above are representations of a real and nominal exchange rate. Regarding nominal exchange rate, there are many fluctuations, but still, the rates range between 11 and 11.25. The real exchange rates had a decrease in the year 2011 due to Arab Spring.

12. Financial status (exchange rates and debt crisis)

Debt crisis
In the year 2008, when the world experienced the global crisis, Morocco experienced the impact indirectly because those states that they did business with were adversely affected. Most of these nations came from Europe. The Economist, (2017). The crisis was called European Debt Crisis. Morocco depended on EU a lot in that was the crisis attacked EU, imports, and exports, as well as inward FDI's, declined drastically, and this resulted in a decrease of Moroccan GDP (The World Bank, n. d). During this period, the tourism industry reduced by 6.9%. Also, oil import that Morocco depended on was adversely affected.
The Arab Spring that occurred in 2011 also affected the nation indirectly. The tourism industry recorded low returns because the political instability was unpredictable in the region. The foreign public debt that was realized in the year 2012 was at 25.7% of the total GDP of Morocco, and this was seen to be the highest decade's ration.
13. Conclusion
From the analysis of the Moroccan economic and political status, the company is in a good position to lead in Africa regarding the economy, political and economic status. Although the setbacks that affect the nation indirectly, its relationship with the developed countries places in a good position to improve its economic status as the role models will be the developed states.
The type of exchange rate policy it is employing now to curb inflation that will be brought about by the fluctuating demand and supply of goods and services as well as fluctuating demand and supply of other currencies. The policy maintains the stability of its currency, therefore, maintaining even the balance of payments. The nation has a lot of economic resources that it exports that will in return increase the wealth of the nation. Minerals such as Phosphate has a high demand in that if it will be managed well Morocco will be the chief exporter of the products. The natural gas produced in the country is a good opportunity for its growth. The mineral has inelastic demand, therefore a good opportunity of monopolizing the product to maximize returns for the benefit of the people. The only set back that the country needs to understand is taxation. There should be a need for the introduction of subsidies that will encourage exports and discourage imports. Exportation associated taxes should be removed to allow for a smooth flow of goods abroad this will strengthen the economy thus increasing the GDP of the country.


References
World Data Bank Development Indicator, (n. d.) The World Data Bank. Retrieved from; http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators
Times, T., F. (n. d) Morocco: FDI Greenfield Projects, Morocco. Inward and Outside FDI. Retrieved from; http://dhaman.net/wp-content/uploads/2016/02/Morocco.pdf
Lahsini, C. (2017) UNCTAD: Foreign Direct Investment in Morocco fell by 29% in 2016. Morocco World News. Morocco. Retrieved from; https://www.moroccoworldnews.com › Economy
Knoema. (2017) World data Atlas. Morocco: Balance of Payments. Retrieved from; https://knoema.com › World Data Atlas › Morocco › Topics › Economy
Trading Economics. (2017) Morocco Unemployment rate. Retrieved from; https://tradingeconomics.com/morocco/unemployment-rate
Trading Economics. (2017) Morocco inflation rate. Retrieved from; https://tradingeconomics.com/morocco/inflation-cpi
World Trade Organization, (2016) Trade Policy Review: Morocco. Retrieved from; https://www.wto.org/english/tratop_e/tpr_e/tp429_e.htm
The World Bank, (n. d) The World Bank in Morocco. Retrieved from; www.worldbank.org/en/country/morocco
The Economist, (2017) Morocco: A new Migration Route to Europe. The Economist Group. Retrieved from; http://country.eiu.com/morocco
International Monetary Fund, (2017) Morocco: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Morocco. Middle East & central Asia Department. Retrieved from: https://www.imf.org/en/Publications/CR/Issues/2017/02/03/Morocco-2016-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-44620
OECD, (2017) Talent Abroad: A Review of Moroccan Emigrants. Organization for Economic Co-operation and Development. Retrieved from; http://www.oecd.org/development/talent-abroad-a-review-of-moroccan-emigrants-9789264264281-en.htm
International Labor Organization, (2006). Morocco. Retrieved from; http://www.ilo.org/public/english/bureau/dwpp/countries/morocco/index.htm