Host country

Economic facts

Nationally, economic activity fared satisfactorily at the level of fundamental macro-economic equilibriums. Real GDP grew by 8.1% in 2006 compared with just 2.5% in 2005. The result may be accounted for by the positive contribution of all the economic sectors, albeit in varying degrees. Thus, the contribution of the primary sector stood at 3.8 points as against -1.9%, a year previously, thanks to the outstanding performance of the agricultural campaign (with cereal production topping 92 million quintals).

The merchant GDP (excluding agriculture) increased by 5.6% in 2006, boosted by the good performance of the industrial, construction, tourism, transportation, and telecommunications sectors, confirming thus the move to a new level of growth, which has been noticed ever since 2004. The dynamism would have been more important had it not been for the counter-performance of the mining and energy sectors which did not live up to their potentialities.

Domestic demand continued to sustain national economic growth in 2006, with a more robust contribution than in 2005, notwithstanding some inflationary trends (reckoned to be in the order of 3.3%, a level not attained ever since 1996). The increasing confidence of households (stimulated by income increases in rural areas), the expansion of the remittances made by the Moroccan expatriate community; as well as the enhanced demand of non-residents all impacted positively on consumer spending which firmed up, in nominal terms, to stand at 12.8%, compared with 2.7% in 2005.

Similarly, investment continued to grow steadily (+10.5% compared with 11.7% in 2005), stimulated by the major infrastructure projects that are underway in different sectors, as evidenced by rises in the purchase of industrial equipment and goods (13.4%) and the credits granted to equipment (18.6%). The evolution has been the outcome of the combined efforts of the private and public sectors.

Accordingly, investment spending as provided for by the State budget in the 2006 financial year, rose by 14.2% compared with 2005 to stand at 23.4 billion Dirhams –which growth should be reinforced by the integration of investments made by public companies and establishments as well as local collectivities.

Better still, the year 2005 was marked by the attainment of an appreciable level of foreign investments and private loans, which totaled 28.1 billion Dirhams –the equivalent of 4.8 percentage points of the GDP—which reflects marked improvement in the attractiveness of Morocco to investors.

The rate of gross investment remained by and large steady at 29.4% in 2006, as against 30.3% in 2005. Moreover, these evolutions have been accompanied by a marked amelioration in the external position of Morocco, as evidenced by the surplus registered in the current account of the balance of payments, which averaged 4% of the GDP, and the decent level of foreign assets (which are now equal to one full year’s worth of imports). The evolution is essentially attributable to the remarkable increases in tourism revenues and the remittances of Moroccan expatriates, which netted more than 100 billion Dirhams in 2006, or roughly 17.4% of the GDP.

The surplus has been achieved despite the rather limited widening of the trade balance. In fact, the vibrant demand of our commercial partners accounted for the continued growth in exports (+ 11.2%) slightly exceeding imports (+11%), which helped steady the commercial deficit (16.3% of the GDP) and improve the import-export coverage (54% compared with 53.8% in 2005).

With regards to public finances, the implementation of the 2006 Financial Law benefited from the favorable economic climate which characterized the budgetary year. The law closed the year on a marked improvement in ordinary revenues (+ 10.5%) and a notably better control of global expenditure (+1.3%), which has made it possible to reduce the budgetary deficit and to bring it back to 1.7% of GDP. This situation occurred in spite of the increase in equalization spending (on subsidized products), the on-going dismantling of tariff, and the actual netting of only 47.7% of scheduled privatization revenues.

At the monetary level, the M3 aggregate grew by 17% compared with 2005, of which 60% may be accounted for by a 48.3 billion Dirhams growth in credits to the economy (+16.5%), reflecting the momentum achieved by productive activities, especially non-farming ones. As for net dues from the State, these have decreased by 2.7%, in the wake of the improvement of the net standing of the Treasury vis-à-vis Bank Al-Maghrib (the Central Bank of Morocco) and the down-switch of its recourse to banks. The liquidity rate of the economy rose by 7.1% to stand at 105.8% in 2006, compared with 2005.

The Casablanca Bourse (Stock Exchange) did exceptionally well in 2006, supported in this by an increase in the number of companies that have gone public. Accordingly, the number of companies which are now listed on the Stock Exchange rose to 64 in 2006 up from 54 back in 2005, which was seen in the gains made by the MASI and MADEX indexes, 71.1% and 77.7%, respectively.

In 2007, the prospects of national economic activities, remain encouraging, despite an expected slow down compared with 2006, owing to the projected edge down in the performance of the primary sector. The national economy should, once again, benefit from a favorable global juncture, the continuation of the actions taken on behalf of private initiatives, as well as the sustained expansion of non-agricultural activities.

In 2007, thus, the GDP in constant prices is expected to grow by roughly 3% (according to the new 1998 basis accounts), on the basis of a hypothetical agricultural production of 53 million quintals. Such an evolution includes a 5.5% activity growth in non-farming sectors, as against 5.2% in 2006, and an 11.7% decline in the primary sector, following a 30.1% growth achieved in 2006.

Concerning demand, the consumption of resident households should rise by 3% in nominal terms, after a 12.8% upsurge in 2006. The slow-down may be due to a decline in agricultural revenues, among other things.

The investment efforts are expected to remain steady, benefiting from the ongoing combined efforts made by the private and public sectors. The FBCF is likely to grow by 11% in nominal terms, after a 10.5% growth in 2006. The rate of gross investment would be standing at 29.9% up from 29.4% in 2006.