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Moroccan economy in the context of the

financial and economic crisis

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The crisis is unprecedented in its scale and consequences

The mechanisms and levels of addressing are exceptional too

-Emergency measurements taken by countries;

- coordination of the national positions on the international level (forums, G-20, regional organizations and blocs)

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MOROCCO

Morocco has managed to resist against the direct effects of the crisis.Nonetheless, given its openness on the global economy, Morocco felt the impact of the economic crisis on the productive sectors linked to foreign demand.

The Government has implemented a number of measures under the 2009 finance act.

Solid fundamentals And structural reforms

Sound banking and financial system Efficient exchange

rate regime

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Politics■ constitutional monarchy with a parliamentary government ■ bicameralism: upper house and lower house■ the constitution prohibits the single party → multipartism and multi labor unions■ Morocco is an arab and muslim country, mediteranean, atlantic and african country■ long diplomatic tradition (Great Britain, USA, Russia, Netherlands etc). Morocco was granted “Advanced status” from EU

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Economy■ 5,6 % economic growth in 2008

■ 61st largest economy in the world

■ two national economic strategies:

Plan Maroc Vert and Plan Emergence

■ official unemployment – 8% in 2008

■ budget surplus – 0,4 % of GDP in 2008 (up from 0,2% in 2007)

■ FDI declined for the first time since 2004, retreating 29% in 2008 to €2.4bn

■ balance of payments’ current account posted a deficit (due to the spiralling trade deficit and a decline in remittances and tourism revenue)

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Budget deficit, % of GDP

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Inflation rate in 1990-2008

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Banking

- limited connection to global financial markets → bank resistance against crisis- 11,1% deposits growth (record €51.5bn)- number of account holders increased from 25% in 2007 to 29% in 2008- banking security issue: in May 2009, the Ministry of Interior ordered 270 banks to increase their security measures - contrary to others countries Moroccan banks issued more loans: 2.6% growth in the first five months of 2009- overall banking earnings increased

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Capital Markets- Morocco All Share Index (at the Casablanca Stock Exchange - CSE) felt less than 14% in 2008 (compared to the Saudi Tadawul All Share Index’s drop of 57% and Egypt’s CASE 30’s 34% slide) - the sixth largest stock exchange in the Arab world and the 3rd ranked in Africa- €48bn market capitalisation at the end of July 2009 - However, 4 of the 5 companies that went public in 2008 saw their shares fall below IPO price

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Tourism

- about 8 mln tourists in 2007 (4,4 mln in 2001). However, hotel nights and tourist income showed negative tendance: 10% drop in receipts is expected for 2009.- CAP 2009, a plan to better promote Morocco globally as a tourism destination. - national tourism strategy Plan Azur: aims the construction of 6 integrated resorts costing €4.05bn- government agreement with the National Hotel Industry

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Environment ◦ National Wastewater Management

Programme ◦ better water rationalisation in agriculture, which uses 80% of water resources ◦ National Renewable Energy and Efficiency Plan: develops alternative energy to meet 15% of its domestic needs and increases the use of energy-saving methods ◦ National Plan for the Development of Solar Thermal Energy aims to install 440,000 solar-powered water heaters by 2012, of which 235,000 are completed

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Environment

◦ solid-waste management programme targets a 90% waste disposal rate for urban areas by 2021. World Bank granted a €121m loan in 2009

◦ ecotourism projects ◦ ambitious solar project: $9 bn, with 5 solar power generation the project is anticipted to produce 38% of the national installed power generation by 2020

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Construction and Real Estate

• Priority for the government-backed social housing projects

• Most sector indicators dropped • Completion times were extended in

the case of many large projects: large resorts of Plan Azur, Infrastructure projects

• The high-end property fell 10-15% in price in 2008

• Demand for low- and medium-income housing continues to be strong, with an estimated deficit of 610,000 units.

• The New Cities programme (creation of 15 new cities)

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Agriculture

• 40% of the population; • between 19% and 21% of GDP;• optimistic outlook for 2009’s

harvest;• The Green Morocco Plan

includes boosting sector GDP contribution to up to €9bn annually from €3.42bn in 2008. It targets modernizing production and boosting quality.

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Telecoms & IT• The 2005 Plan Emergence resulted in the creation of

Casanearshore and Rabat Technopolis offshoring centres.• A new four-year Impact Plan aims to support small and

medium-sized business computerisation, e-government and broadband access and promote entrepreneurship in new and niche ICT areas.

• A low internet penetration rate (21%) presents a challenge for the development of e-commerce .

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Telecoms & IT• The telecoms market generated

more than $3.75bn in turnover in 2008, or 7% of GDP.

• 3G technology, introduced to the market in 2007, shot up 527.5% in 2008 (now 35.4% of Internet connections).

• The mobile penetration rate rose from 65.7% at the end of 2007 to 74% at the end of 2008

• Fixed lines renaissance in 2008, growing 24.96% → the addition of an extra digit to existing phone numbers.

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Industry• Mostly due to foreign demand

contraction textiles production fell (by 3,3%, leather - by12.5%, metal products - by 40.9%

• The world’s largest phosphates exporter

• Some sectors (auto industry, cement) showed negative tendance on the international and positive on the domestic markets

• Pharmaceuticals sold well domestically, with average expenditure per person rising from €26 in 2007 to €30.60 in 2008

• Maroc Export Plus plan for 2009

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Retail

• Retail sales have been less affected by the financial crisis, with only some non-food products, including clothing and household goods, posting slight declines.

• The part of small grocere is still about 91% of the total market.

Expansion of the supermarket segment: French chain Carrefour,Turkish discount store BIM, Morocco Mall in Casablanca (opening in 2010)

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Crisis transmission channels

• Foreign trade

• Drop in touristic revenues

• Decline in remittances

• FDI contraction

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The Moroccan strategic follow up committee

• Created in February 2009

• Monitoring mechanism

• Main spheres of action: social, financial, commercial

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ResultsDespite a deterioration of economic situation of its trading partners Morocco’s economic performance has remained solid.GDP grew by 5,6% in 2008 despite the declines in the manufacturing, tourism and export sectors.In light of recent stabilizing trends in these sectors and relatively sustained domestic demand, real non agricultural GDP is expected to grow by about 2 ½ percent in 2009. Combined with the record cereal production, overall GDP growth is projected about 5,4 percent. The global economy remains vulnerable to shocks such as an increase in the oil price, the H1N1 flu, protectionism and geopolitical tensions.

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