While 2010 saw a slight fall in Morocco's growth due in part to reduced agricultural output, the past 12 months have also seen a rebound in the capital markets. This, along with increasing demand for exports and a set of new government-backed investment plans, bodes well for continued expansion in the medium term.
Estimates for GDP growth in 2010 lie in the region of 4%, according to the International Monetary Fund (IMF). In light of the global crisis, the Kingdom's performance was steady if not strong, buoyed by increasing diversification and rising purchasing power, but growth rates nonetheless marked a fall from pre-crisis levels of 5% and 5.6% in 2009 and 2008.
Crucially, however, a large proportion of the responsibility can be borne by exogenous causes: primarily, a 27% decline in the size of the annual harvest caused by bad weather, beyond the control of even Morocco's most far-sighted policy planners.
The poor harvest and high global wheat prices, combined with rising energy prices, negatively affected both the current account and government finances by necessitating additional grain imports and more than doubling the cost of government subsidies for basic goods including bread and fuel from MAD8.2bn (€734m) in the same first nine months of 2009 to MAD20bn (€1.79bn) in the same period in 2010. The IMF expects general government net debt to have risen to 49.2% of GDP in 2010, from 47% in 2009, putting further pressure on the government to find a way to reduce its costly subsidy bill. Increased grain and oil imports also accounted for much of the 2.6% widening in the country's trade deficit in the first 10 months of the year, though higher phosphate prices prevented a larger increase.
However, in spite of the increased commodity volatility, the majority of Morocco's macroeconomic indicators in 2010 were very encouraging. The relatively steady rates at which the Kingdom's economy has expanded in recent years underline the strides that Morocco has made since leaving behind the era of fluctuating GDP rates that once characterised the economy - a legacy from when the non-agricultural economy was proportionately much smaller and poor harvests could easily lead to annual contractions.
The government is also forecasting higher growth of 5% in 2011, slightly above the 4.3% estimate of the IMF. Other macroeconomic indicators bode equally well. For example, in spite of the slight fall in growth, the latest figures show a fall in unemployment from 9.8% of the workforce in the third quarter of 2009 to 9% in the same period in 2010.
The past year has also seen a welcome recovery for the Casablanca stock market, with the MADEX index up over 22% for the year in late December, following a 5% fall in 2009 and 13% in 2008. Banking and construction materials equities led the way, underling Morocco's success in avoiding a major banking or real estate crisis during the global downturn. The biggest gainers in the banking industry included Attijariwafa and BCP banks, which were up 52% and 69% respectively for the year in late December 2010. Attijariwafa saw a 16.5% increase in net profits in the first six months of the year. Meanwhile Lafarge Maroc and Ciments du Maroc led the pack in construction materials, up 53% and 25% respectively.
Increased deal-making activity helped boost the stock exchange in 2010, evidenced by one of the highest profile business transactions of the year -the restructuring of ONA, which is part-owned by the public sector and is the largest conglomerate in the country, and its parent company SNI. Under the plan announced in March, shareholders led by SIGER holding group bought up free-floating shares in ONA and SNI , leading to the delisting of the two entities from the bourse in August, with the aim of transforming ONA from an actively-managed conglomerate into an investment holding company. To this end, the plan envisages the group reducing its stake in many key affiliates, in some cases via IPOs that have been lacking from the bourse in recent times, likely some time in 2011. Other major deals during the course of the year included the purchase, announced in September, by France Telecom of a 40% stake in Meditel, one of the country's three mobile phone operators, for €640m, after Spain's Telefonica and Portugal Telecom sold their stakes of 32% each in 2009.
The tourism sector, which is estimated by the World Travel and Tourism Council (WTTC) to have accounted for around 14% of GDP in 2010, saw another year of growth in arrival numbers, which were up a strong 11.8% year-on-year in the year to the end of October, while receipts grew by 7%. The government expects the total for the year as a whole to grow 11.5% to 9.3m, meaning it almost achieved its plan, launched at the start of the decade, to increase tourism arrivals to 10m by the end of 2010.
At the end of November the government launched a new plan, named Vision 2020, aiming to double tourist numbers again by 2020, which would see tourism emerge as the second largest national industry after agriculture. The plan already has some investment and financing agreements in place behind it, including commitments by two leading local banks to fund MAD24bn (€2.14bn) worth of tourism development projects as well as the creation of an MAD15bn (€1.34bn) government tourism development fund.
The year saw further moves to develop the country's transport infrastructure, with December alone witnessing the signing of six financing and procurement agreements for the construction of a high speed line between Tangier and Casablanca, which will better than halve the journey time when the line opens in 2015. December also saw the African Development Bank provide a €300mn loan to upgrade other parts of the Tangier-Marrakech line. This will include the construction of a third, freight-only, line along some of the route that will substantially increase freight transport capacity between the country's commercial capital Casablanca and the country's largest port, Tanger Med.
The European Investment Bank agreed in November to provide a €200mn loan to aid the construction of Tanger Med II, which will open in 2012, as well as another €220mn for construction of a new motorway; the same month saw the Arab Development Bank announce a $214mn loan to fund port expansion as well as a dam. The year also saw plans for airport infrastructure upgrades, with the national airports authority ONDA announcing plans in November to raise $238mn to that end. Last year also saw good news on the foreign investment front. Foreign direct investment (FDI) increased by 16% in the first 10 months of the year in comparison with the same period in 2009, to MAD20.2bn (€1.8bn). The government in June launched a campaign aimed at attracting more investment from abroad, in particular from Spain and France.
French car maker Renault announced in March that it would launch two new models as part of its low cost Dacia line, both of which are to be produced entirely at the plant it is building in Tangier, which is due to come on line in 2012 and have an eventual production capacity of more than 400,000. Renault also announced in June that the plant will be a zero carbon facility.
© Oxford Business Group 2011
