Overseas Market Profiles

Major Economic Indicators

Source: IMF, Economist Intelligence Unit (EIU)
* IMF or EIU estimate
^ January-November

Recent Developments

• The Moroccan economy expanded by 4.9% year-on-year (YoY) in the first three quarters in 2009, thanks to an exceptionally strong agricultural sector, which grew by 26.9% YoY.
• Most economic sectors remain buoyant despite the financial tsunami, except for mining (sectoral GDP down 31.2% YoY in January-September 2009), and hotels and restaurants (sectoral GDP down 4.7% YoY in the same period).
• Hong Kong's total exports to Morocco managed to edge up 5.5% YoY to US$111 million for 2009, despite a global trade contraction in the beginning of 2009. On the other hand, Hong Kong's imports from Morocco declined sharply by 40.5% in 2009, driven by slumping electronics imports.

Current Economic Situation

The Moroccan economy expanded by 4.9% in the first three quarters in 2009 year-on-year (YoY), thanks to an exceptionally strong agricultural sector, which grew by 26.9% YoY. Most of its economic sectors remain buoyant despite the financial tsunami, except for mining, the sectoral GDP of which went down by 31.2% YoY in January-September 2009 due to lower prices of phosphate (of which Morocco is a major exporter in the world), and lower production levels.

Due to the economic turmoil in Europe, visitors to Morocco dropped. As a result, hotels and restaurants’ sectoral GDP was down 4.7% YoY in the first three quarters of 2009.

Morocco’s economy remains dependent on agriculture, a sector which accounted for about 12% of GDP as of 2007, and employs about half of the workforce.

Industry accounted for 29% of Morocco’s GDP in 2007. Major industries in Morocco include chemicals and fertilisers, textile and garment, electronics, and food.

The GDP share of the services sector in Morocco was at 59% as of 2007, with tourism being the major service industry. The country’s information technology outsourcing (ITO) and business process outsourcing (BPO) are developing quickly, capitalising on a lower-cost French-speaking population (and to a lesser extent, Spanish-speaking population) to tap the French outsourcing businesses (and similarly, the Spanish market). The government foresees the outsourcing businesses will generate about a GDP contribution of US$2 billion (about 2% of 2009’s estimated GDP) and create 91,000 new jobs.

The government launched Plan Emergence in 2007, a programme to enhance Morocco’s competitiveness. It identified several key industries for further development, including: outsourcing, the agro-food industry, the seafood industry, textiles, the automotive, aeronautics and electronics sectors. It would boost these sectors through the construction or dedicated industrial zones, encouraging the development of higher value-added products and support in overseas marketing.

Trade Policy

The Moroccan Dirham is not yet fully convertible, but its foreign exchange regime is liberal enough not to hamper normal trade transactions. The currency is convertible for all trade in goods and services. The Foreign Exchange Office (Office des Changes) administers foreign exchange matters, and certain procedures have been delegated to authorised banks.

Imports into Morocco must have the import certificate registered with an authorised bank. Upon receiving other import documents, payment in foreign currency can be arranged.

Currently, products imported into Morocco may be subject to customs duty, the parafiscal import tax (0.25% for most products), value added tax (VAT), and domestic consumption taxes (TIC), as well as other various duties and taxes.

Morocco's applied tariff structure comprises 42 different rates. The rates are usually: 2.5; 7.5; 10; 20; 27.5; and 35 per cent. About 50% of the goods are levied at the 7.5 per cent rate, 35% of the goods at the 35 per cent rate. Agricultural products are not covered by this tariff structure and are subject to rates of up to 304 per cent, as well as variable rates.

Morocco is working to reduce tariffs. It intends to reduce the maximum rate of 35 per cent on industrial goods to 25 per cent in 2012. The simple average of MFN customs duties is 20.2 per cent, a decrease of 13.2 per cent compared with the simple average for 2002.

VAT applies to imported or locally produced goods and services. For imports, it is levied on the customs value, plus any duties and taxes imposed, including the domestic consumption tax. For locally produced goods, it is calculated on the selling price.  VAT does not apply to agricultural activities.

There are four rates under the two regimes: a regular rate of 20 per cent and three reduced rates: 14 per cent, 10 per cent, and 7 per cent. Reduced rates are for essential items such as certain food items, medical products and services, fishing gear, and newspaper and educational materials, etc.

Morocco has signed a number of free trade agreements (FTAs) or trade facilitation agreements, giving Moroccan products preferential access to other markets. These include: the US, the EU, the European Free Trade Association (EFTA)¹; Egypt, Jordan, Tunisia (the “Agadir Agreement”), Turkey, and the Pan-Arab Free Trade Area (PAFTA) which consists of 17 Arab member countries.

Hong Kong Trade with Morocco ^

Hong Kong's total exports to Morocco managed to edge up 5.5% YoY to US$111 million for 2009, despite a global trade contraction in the beginning of 2009. Major exports in 2009 included telecommunication equipment and parts (US$72 million, 64.2% of total, +7.5% YoY), television receivers (US$5 million, 4.9% share, +280.6% YoY), and computers (US$4 million, 4% share, +65.8% YoY).

On the other hand, Hong Kong's imports from Morocco declined sharply by 40.5% in 2009, driven by slumping electronics imports. Major imports in 2009 were semi-conductors, electronic valves and tubes (US$100 million, 92.2% share, -40.4% YoY), and leather (US$2 million, 2.2% share, a new import for 2009).

^ Since offshore trade has not been captured by ordinary trade figures, these numbers do not necessarily reflect the export businesses managed by Hong Kong companies.

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¹ The EFTA has the following members: Iceland, Liechtenstein, Norway and Switzerland