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Morocco Investment Report

1688 words - 7 pages

Morocco Investment Report
Introduction of Morocco:
The Kingdom of Morocco is situated in northwest Africa, with a population of 33 million and an area of 710,850 km2 (including administration over the disputed Western Sahara region). The political capital is Rabat, and the largest city is Casablanca.
Its government takes the form of a constitutional monarchy with two houses of parliament and a king who exerts strong executive powers, including dissolving parliament at will. Legislative power is vested in both the government and the two chambers of parliament, the Assembly of Representatives and the Assembly of Councillors.
It enjoys a free market open economy with ...view middle of the document...

From historic data, we see that the CPI growth rate was relatively high during 2008, but is getting better now.
CPI growth rate (per month):

Source: Bloomberg
Morocco is the world's third-largest producer of phosphorus (after China which is first, and the United States which is second), and the price fluctuations of phosphates on the international market greatly influence Morocco's economy.
Morocco phosphate rock export price:

Source: Bloomberg
Foreign direct investment:
Foreign direct investment (FDI) inflows have risen since 2000, reaching a record level of MAD 40.1billion in 2007. In recent years FDI has taken on a greater role in the domestic economy: in 2007, annual FDI inflows represented nearly 18% of gross fixed capital formation, and 6.7% of GDP. During the financial crisis, FDI flows which already declined in 2008 (–15%) have continued to contract in 2009. In sectoral terms, telecommunications and manufacturing dominate (27% and 20% respectively of the end-2007 FDI stock), but some categories of services such as tourism and banking are now also becoming important targets for FDI.
Foreign direct investment and growth rates:

Source: Bloomberg
The fact that FDI was growing until recently reflects the significant progress that Morocco has made in improving investment conditions, especially by enhancing the transparency and predictability of policies and regulations governing investment. The main outcome here has been the adoption, in the framework of the free trade agreement concluded with the United States, of an approach that leaves all sectors free of restrictions except for those specified in a negative list.

Three Key Uncertainties:
In our opinion, the three great uncertainties facing Morocco are as follows, in increasing importance:
a) Uncertainty of climate and rainfall
b) Rising price of oil and other key commodities such as foodstuffs
c) Geopolitical stability issues, such as recent protests in the Arab world
First of all, the uncertainty of rainfall and drought is likely to have a significant impact on the economy in any given year, given the fact that almost half the population is still employed in agriculture. Historically, data have shown that years of drought have led to sharp rises in unemployment and a significant negative impact on GDP.
Second, recent increases in the price of oil and other commodities are likely to bump up the costs of production and living costs, as Morocco has no oil reserves and relies heavily on imported oil (97%). This is a major problem faced especially by developing countries around the world, and if not addressed soon by national and international authorities, may lead to further social unrest in the affected countries.
Source: Bloomberg
The third, most dangerous and most “uncertain” uncertainty is the recent spate of protests in the Arab world. So far, Morocco has been spared from widespread violence (only five people have died when a bank was set on...

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