Morocco has achieved macroeconomic stability since the early 1990s. The external current account has been in surplus since 2001 and external reserves increased to a comfortable level. In 2004, macroeconomic and financial conditions remained stable. While the overall GDP growth slowed down to 4,2%, on account of the decline in growth in the primary sector, non agricultural GDP growth picked up because of a dynamic tertiary sector and a recovery in mining and energy.

Economic performance
Growth has however been volatile and insufficient to significantly reduce poverty and unemployment. Growth rate averaged 3% over the last decade and it has been volatile because of the dependency of agriculture to rainfalls. The recurrent droughts contribute to increasing poverty in rural areas and although the growth of the non agricultural sectors has become more resilient to agricultural output, it is insufficient to significantly reduce unemployment.
The unfavorable agricultural campaign is expected to affect macroeconomic conditions in 2005. The overall GDP growth rate is projected at about 1%. The current account is likely to register a small deficit partly because of a high level of imports of food products and higher oil bill. Nonetheless, the overall balance of payments is expected to remain in surplus and the fiscal deficit, excluding privatization revenue, is expected to increase by about 5,5% of GDP. Large privatization receipts will help contracting the debt to GDP ratio at about 70%.
Morocco is self-sufficient in food and the main  agricultural exports are fruits and vegetables. The country's coastal waters are rich in fish and commercial fishing constitutes an important sector of the economy. Export crops are mainly grown on modern, large-scale farms which occupy some 10% of the 9 million cultivated hectares.
Manufacturing industries are mainly located in Casablanca, Fez, Rabat, Tangier and Settat. Considerable investment has been made in cement works and sugar factories to meet the major part of local demand.

Manufacturing contributes some 20% to GDP and is concentrated mostly on food processing for export, textiles and leather goods, pharmaceuticals, chemicals and fertilizers, cement and building materials and vehicle assembly. Almost one-third of Morocco's industrial companies are exporters, marketing nearly half of their production abroad. Approximately one third of the industrial output is coming from foreign-owned companies and many prestigious brands are present in Morocco.
The services industry has become an increasingly important sector too. It employs about 40% of the total workforce and the government is actively encouraging the development of tourism, mainly in Agadir and Marrakech. Efforts are not only directed toward developing additional hotel room capacity, but also to improve quality and enhancing recreational and entertainment facilities. Income from the tourism industry stands at almost one third of the value of the country's merchandise exports.
The diversity and value of the exploited minerals have enabled the Moroccan mining sector to play a key role in the national economy. Morocco possesses nearly three-quarters of the world's estimated reserves of phosphates.  The phosphate industry has been a major source of export earnings and much emphasis is placed on the export of phosphate derivatives, particularly phosphoric acid. Mining provides a 5% contribution to GDP , excluding phosphates for which Morocco ranks as the 3rd producer and the first exporter in the world, controlling one third of the international trade in phosphate and its derivatives.

Future prospects

Morocco continues to implement its broad based structural reform agenda. Large state-owned enterprises have been privtised and remaining public companies are being restructured or prepared for privatization. In the area of trade liberalization, the implementation of the association agreement with the European Union, Morocco's main trading partner, is proceeding as scheduled. Trade agreements were also signed with the United States, Turkey, Tunisia, Jordan and Egypt to complement the association agreement with the EU. Most Favoured Nation tariffs were reduced to a maximum of 10% for goods freely traded with the EU . In the context of Morocco's increasing integration into the world economy, accelerated structural reforms is an essential element of a high growth strategy.
The trade agreements will help attract foreign direct investment and boost the country's growth and export performances. To fully exploit the benefits of trade integration, there is need to simplify the tariff structure, further reduce tariffs and eliminate variable tariff rates in parallel with the reform of the food subsidy system. Liberalization measures in the area of telecommunications already have contributed to the current dynamism of the sector and those related to air transportation have positively impacted tourism.
The Moroccan government welcomes foreign investment, providing the same advantages as it does for local investors. There is no activity for which foreign investment is prohibited or restricted. Benefits, sell offs and liquidation funds can be transferred 100% to the country of origin. The existing investment codes have been improved by a charter that responds to the needs of investors.
The government has established a one-stop-shop for investment applications. The aim is to facilitate procedures and to encourage investors from countries that have a weak presence in the country, namely Japan, Taiwan, Singapore and other Far Eastern countries.
The financial sector is being strengthened and the imminent promulgation of a new central bank and banking laws will further enhance the autonomy of the central bank and its supervisory power. A new labour law has been approved and is expected to improve labour relations and flexibility of the labour market. The government is pursuing its efforts to fight poverty and to improve social conditions. Emphasis is on education, health care, housing and basic infrastructure.
The impact of these reforms on Morocco's growth rates should be observed in the medium term.

Morocco is a leading played in the EuroMed (or Barcelona) process, the objective being to establish a Free Trade Area by the year 2010. Morocco signed an Association Agreement with the European Union in March 1999. The Agreement calls for the gradual elimination of tariffs on Morocco-EU trade in industrial goods over a period of 12 years. Agricultural products (including most imports exports like citrus and tomatoes) are not covered by the agreement. Morocco already enjoys free access to the EU for virtually all non-agricultural products. The major effect of the Association Agreement will this be to phase out Moroccan tariffs for EU manufactured goods.

Basic Economic and Financial Indicators, 2000-05

Sources.: Moroccan authorities and International Monetary Fund

Source.: MBCE Bank