Country outlook Morocco - CaixaBank Research
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Country outlook Morocco
Closing date of this issue: October 2019
Form of Government: Constitutional monarchy
Morocco Capital: Rabat
Official language: Arabic and Berber languages
Population: 36 million inhabitants (2018)
Currency: Moroccan dirham (MAD)
Exchange rate: 1 EUR = 10.63 MAD (30/09/2019)
1 USD = 9.75 MAD (30/09/2019)
GDP: $118 billion (0.2% of world GDP)
GDP per capita: $3,359 ($8,933 purchasing power parity)
Ease of doing business: 60th in the world out of 190
according to the World Bank (Doing Business)
Religion: Muslim: 98.3%
Country Outlook is a publication that is produced jointly by CaixaBank Research and BPI Research (UEEF) and it contains information and opinions from sources that we consider to be reliable. This
document is for information purposes only, so CaixaBank and BPI are not liable in any way for any use that may be made of it. The opinions and estimates are provided by CaixaBank Research and BPI and
may be changed without prior notice.Morocco
PIB. Variación interanual (%)
Economic GDP. Year-on-year change (%) CPI. Year-on-year change (%)
forecast 5
Forecast
2.5
Forecast
4 2.0
3.9 1.5 1.5
3 1.5
3.1
2.7 0.7
2 1.0
1 0.5
0 0.0
Average 2015 2016 2017 2018 2019 2020 2021 Average 2015 2016 2017 2018 2019 2020 2021
2010-14 2010-14
• In 2019, the economy will grow by a little less •The dynamics of Moroccan inflation are
than 3.0%, a lower rate than in 2018, due to a determined to a large extent by trends in
smaller contribution from the agriculture international prices of energy and food, since
sector, which was affected by adverse weather both items represent 60% of the CPI and the
conditions. This year, it will also be affected by country is a net importer of both. In this sense,
the slowdown of the EU, the country’s main 5
we expect inflation to slow in 2019 with
trading partner, whose effects on the 4 falling food and energy prices and ongoing
Moroccan economy may be fewer exports, 3 government subsidies for basic goods such as
less tourism, fewer capital remittances and gas, sugar and wheat. Inflation will rebound
2
less foreign investment. Growth is expected to slightly in 2020-2021 due to the expected
gradually accelerate in 2020-2021 as the 1 increase in food prices.
European situation improves and the harvest 0
returns to normal levels.
Economic Benchmark interest rate (%)
policy and exchange rate (MAD/USD) Fiscal balance (% GDP)
Forecast Forecast
4 10.0 0
9.7 9.7
9.6
9.5 -1
3
2.5
2.3 2.3 -2
9.0
2 -3
8.5 -3.0
-3.3
EE. UU. Eurozona -4
Emergentes -3.7
1 8.0 -5
Fuente: CaixaBank Research, a partir de datos deCitigroup y Bloomberg.
0 7.5 -6
Average Average 2015 2016 2017 2018 2019 2020 2021 Average 2015 2016 2017 2018 2019 2020 2021
2010-14 2010-14 2010-14
Benchmark interest rate (left scale)
Exchange rate (right scale)
Current account (% GDP) Public debt (% GDP)
Forecast Forecast
0 70 0
-1
-2 65
4 -3.1 65.3
-3.8 64.5 -2
-4.5 63.2
-4 10,0 60 -3
3
9,5 -4
-6 55
2 -5
9,0
-8 50 -6
1 Average 2015 2016 2017 2018 2019 2020 2021
8,5 Average 2015 2016 2017 2018 2019 2020 2021
2010-14 2010-14
0 8,0
• Morocco has undertaken a process to liberalise • The fiscal consolidation efforts taken in recent
7,5
the exchange rate policy so that it has more years0 have helped to reduce the fiscal deficit
room for manoeuvre in the event of external below the average for the last few years. The
economic shocks and to increase its authorities
-2 expect to reduce the fiscal balance
competitiveness. The first step was taken in to 3.7% of GDP in 2019, to hit the 3% target
-4 70
2018 with the increase of the fluctuation in the next two years. The government’s
range of the Moroccan dirham against the implementation
-6 of structural
65 reforms, such as
reference basket (euro and dollar). The central the tax reform and the development of
bank is expected to continue to gradually programmes
-8 to privatise
60 state-owned
implement these reforms in order to avoid companies, will be key to gradually correcting
excessive volatility (full liberalisation of the the relatively high public55debt.
currency is not forecast until 2022). We expect 50
the dirham to remain relatively stable against
the dollar over the next few years.Morocco
Financial Private credit (% GDP) Gross external debt (% GDP)
conditions 70
Forecast
60
Forecast
50
63.5 43.7 43.0 42.2
65
62.6 40
60.9
60 30
20
55
10
50 0
Average 2015 2016 2017 2018 2019 2020 2021 Average 2015 2016 2017 2018 2019 2020 2021
2010-14 2010-14
•
Banks continue to have a correct level of • International reserves are expected to remain
capitalisation, and although
70 the risks of at high levels, corresponding approximately to
financial stability are relatively limited, high five months of imports. The government plans 60
65
exposure to the agricultural sector is a matter to issue two international bonds (each valued 50
of concern. The non-performing loan ratio, at 1 billion USD) in 2019 and 2020 respectively, 40
60
though still relatively high, has shrunk in recent suggesting that it is capable of securing external 30
years and loans are well-provisioned.
55 The financing, including in foreign currencies. 20
private credit trend will continue to be closely
10
linked to economic growth, 50 reaching levels (in
0
terms of GDP) slightly below that of previous
years. However, for the first time in five years,
the Alawite Central Bank (Bank al-Maghrib)
has lowered the reserve ratio required of banks
to 2% (from 4%) as a way of releasing liquidity
and boosting private consumption.
Political • We expect that Morocco will continue to be • The regime’s stability and the fight against
situation one of the most politically stable and secure terrorism reinforce the support from advanced
countries in the region. economies. Morocco’s return to the African
• Despite having a majority, the government Union demonstrates the improvement of its
coalition formed after the 2017 elections and political ties with the rest of the continent’s
its subsequent reshuffle in October 2019 is very countries.
fragmented, which means that we cannot rule •Social inequality, high youth unemployment,
out the possibility of it collapsing. lack of transparency and corruption generate
unrest.
Long-term GDP growth (%) Population (milions of inhabitants)
outlook 6 41
40.1
5 40
3.6 3.7 39
4
38
3 37
36.0
2 36
35
1
34
0 33
Average 2009 -18 Average 2019 -29 2018 2028
• Morocco is making an effort to diversify and •
The importance of changing its production
reduce the relative weight of agriculture. The model, and of undertaking a new generation
Alawite Kingdom already has the most of structural reforms (labour, educational,
competitive manufacturing industry in North etc.), is highlighted by a relatively weak
Africa and wants to position itself as the main demographic outlook (in the context of the
automobile manufacturing centre in the region).
region. Moreover, it has made a notable effort
to establish itself as the “gateway” to Sub-
Saharan Africa by developing a more
favourable environment for businesses, mostly
from African countries.Morocco
Country Rating
Last
Outlook CDS* 5 years (basis points) OECD credit risk rating
risk changed
200 (from 0 to 7, with 0 being the best)
BBB- 4/10/19 Stable 150
157.3
Ba1 20/11/18 Stable
100
87.9
3
50 7
BBB- 19/04/07 Stable 0
Average 2015-18 30/09/2019
Indicates that the country has an “investment grade”. *Credit default swap: a measure of country risk that reflects
the cost of insuring the default of the sovereign bond.
Indicates that the country does not have an “investment grade”.
Risks SHORT-TERM LONG-TERM
• Slowdown of the euro area - + • Inequality and poverty - +
• Geopolitical uncertainty - + • Maintenance +
-
• Increased tightening up of of the production model
international financing - + +
• Geopolitical uncertainty -
Business STRENGTHS WEAKNESSES
environment • Competitive manufacturing industry. • Lack of transparency.
• Urban population. • Corruption.
• Political stability. •Inefficient labour market.
• Market size. • Slow implementation of democratic reforms.
Main sectors •
Electronics, vehicles, fabrics and clothes, • Mineral fuels, machinery, vehicles, electronics
fertilizers, fish and crustaceans. and cereals.
CIBI | CaixaBank POSITION PILLARS SUBPILLARS
Index for Business IN COUNTRY 1. Accessibility
Internationalisation RANKING 100
80
Top
66.9
Similar tastes to Spain
22
60
5. Stability
40
2. Ease Distance, communications,
67 44.2
20
51.7 of operating and agreements with Spain
Investment relations
0
with Spain
45.1
79.3 Bottom
4. Financial environment 3. Commercial
and innovation attractiveness Innovation capability
Labour conditions
— Africa — Morocco Purchasing Power
(Min. 0 - Max.
100
100)
80
60
40
20
Source: CaixaBank Research, based on data from Bloomberg, IMF, OECD, Oxford Economics and Thomson Reuters Datastream.Morocco
Taxation Morocco has nearly the same taxes as Spain. In stimulate its export-based economy, over a
the case of companies wishing to set up in decade ago Morocco started to develop and
Morocco with their own facilities, the following create new port infrastructures and industrial
taxes need to be taken into account: corporate platforms and to implement more flexible
tax (I.S.), general income tax (I.G.R.), value legislation that was more favourable for
added tax (T.V.A.), tax on income from shares, exporting companies, in Tangier, Kenitra and
holdings and similar (T.P.A.); and other taxes Nador. The main advantages offered are: i)
and duties. In the case of I. S. the rates are 31%, Foreign Exchange Law: not subject to the
17.5% and 10%, depending on the company’s country’s foreign exchange laws. Companies
turnover. The other tax that directly affects a based in the foreign trade zones are not subject
company’s operations in this country is T.V.A., to the foreign exchange regulations and they
for which there are four rates: a normal rate of can freely carry out any foreign fund transfers, ii)
20% (goods and services not included in the Customs: goods entering or leaving the free
other exempt groups); the rate for widely trade zone to go abroad are not subject to duties
consumed goods (7%), food (10%) and other and iii) Taxation: preferential rates for corporate
products (14%). tax and wages for 15 years/tax exemption on
Additionally, it should be noted that in order to dividend payments abroad.
Investment In Morocco, direct foreign investment was 3.3 countries in this country are France, the United
billion dollars in 2018. The main investor Arab Emirates, Saudi Arabia and the U.S.
Establishment LOCAL COMPANY
In Morocco there are also different ways to be paid up when the company is incorporated
establish a commercial enterprise. The most and the remaining 75% during the following
common are Société Anonyme (S. A.) and three years. No minimum capital is required
Société a Responsabilité Limitée (S. A. R. L.). when S.A.R.L. companies are founded, but
The main characteristics in the case of S.A. firms are usually set up with a capital of MAD
companies are a minimum of five shareholders 10,000, with 25% being paid up at the time of
and a minimum capital of MAD 300,000, while establishment. They can be owned by one or
if the company wants to be listed on the stock more founding shareholders (gérants). There
market, this minimum capital must be at least are also cooperatives, very similar to those in
MAD 3 million. 25% of the share capital must Spain, called Société en nom Collectif (SNC).
BRANCH
Any foreign firm can set up a branch in minimum capital, no articles of association
Morocco, but the procedures involved are required, etc. But ultimately, the procedures
actually no faster or simpler than setting up a involved in setting up a branch take just as
company. The advantages are simple: no long as for any other type of company.
REPRESENTATIVE OFFICE
Representative offices in Morocco are limited commercial activities. These offices must be
to gathering information on the market, entered in the Moroccan Commercial Register
sectors, etc. and promoting business in the and their directors must have the necessary
country. They are not allowed to carry out business permits.
Alliances FREE TRADE ZONE
strategic Morocco currently has seven free trade zones the shipment of goods, especially towards
positioned strategically in different locations African countries.
to facilitate the export, by EU countries, and
JOINT VENTURE
The name in Morocco for this type of enterprise decisions taken, as well as operating profits
is a Société en Participation (S.E.P.). In Morocco and losses being equally distributed. To
this kind of commercial relationship does not formalise this alliance, both parties must be
need to be reported to third parties. entered in the Commercial Registry, and it can
Shareholders are responsible for all the take the form of a civil or commercial company.
Customs FREE TRADE AGREEMENTS
conditions There has been a free trade agreement for to extend the benefits in international trade
agricultural and fisheries products with EU between both zones. Morocco has not only signed
Member States since 2012. Moreover, both agreements with the EU to strengthen foreign
regions are currently holding negotiations, at a trade, it also currently has free trade agreements
highly advanced stage, for a Deep and with the US, Turkey and another quadrilateral
Comprehensive Free Trade Agreement (ALECA) agreement with Egypt, Tunisia and Jordan.Morocco
Customs FREE TRADE ZONE
conditions The principal condition for a company to be set from general income tax on individuals during
(continuation) up in a free trade zone and take advantage of the first five years and 80% reduction on the
the special tax conditions is that at least 70% of taxable income during the following 10 years.
the turnover achieved by the firm must come Exemption from T.V.A., free repatriation of
from exportation. The main tax breaks of these capital and profits. Exemption from registration
zones are: exemption from I.S. during the first and stamp duties, charges for capital increases
five years of activity and payment of 8.75% in and acquisition of land so long as the companies
I.S. during the following 10 years. Exemption continue their activity for at least 10 years.
GENERALISED SYSTEM OF PREFERENCES (GSP)
Morocco is one of the countries that benefits from the GSP when exporting its products to
international markets.
Negotiations BUSINESS CULTURE
and protocol French is essential in this country, although Moroccan businesspeople tend to have a “wait
Spanish is used in many regions. It is a slow process and see” attitude. Bartering must be taken into
to enter this market and several visits are required account when setting a price, as this is very
to cement commercial relationships. Face-to-face common in Arab countries. Deadlines tend to be
negotiations are vital for concluding contracts. very flexible and punctuality does not stand out
Several topics unrelated to the main business at in this market.
hand are usually covered in business meetings.
Top fairs • Siam Meknes. • Madecor.
• Halieutis Agadir. • Expo Halal International.
• Sifel Maroc Agadir. • Pollutec.
• Morocco Automotive. • CBH.
Websites • Investing in Morocco: http://www.invest.gov.ma/
of interest • Moroccan customs: http://www.douane.gov.ma
• Moroccan International Chamber of Commerce: http://www.iccmaroc.ma/
• Department of Foreign Trade: http://www.maroc-trade-gov.ma
• Ministry of Industry, Trade, Investment and Innovation: http://www.mcinet.gov.ma
• Agency to promote SMEs: http://www.anpme.ma
Payment MEANS OF COLLECTION
and charging The means of collection normally used in where the Spanish bank is in charge of all the
methods international transactions are very common in procedures to offer additional security for the
Morocco. Documentary credit is the best method commercial transaction. The Moroccan banking
to guarantee payment in international sales. system also permits simple transfers, although
Import remittances are also recommended, attention must be paid to exchange rate controls.
MEANS OF PAYMENT
As with means of collection, the most common to Morocco can ensure payment will be made as
and secure forms when establishing payment agreed in the transaction for the products or
methods between companies are documentary services. It is advisable to use risk agencies to check
remittances, documentary credit and SWIFT potential clients in the Moroccan market.
transfers. With these means, companies exporting
EXCHANGE RATE INSURANCE
Given the ongoing process aimed at flexibilizing the dirham exchange rate regime, use of exchange
rate insurance is recommended.
CaixaBank Through the CaixaBank branch in Morocco, we communication channels with local financial
in the country offer consulting, financing and basic banking institutions, supporting CaixaBank customers’
services to firms both in the country itself as activities in the country, whether they are
well as in the economic flows with other foreign trade or investment and deployment
countries. In foreign trade, its aim is to improve projects.CaixaBank Bogotá (Colombia)
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Agadir branch Casablanca branch Tangiers branch
Av. Hassan II, 41 Etage Nº4 179 boulevard d’Anfa “Office Building” Angle Bd Med V et Victor
08000 Agadir - Morocco 20100 Casablanca - Morocco Hugo 4º Etage N°28
90000 Tànger - Morocco
Director: Fernando Santos Mira Director: José Ignacio Pino
Tel. (+34) 639 969 586 Tel. (+21) 2 661 172 364 Director: Mohamed Mesbah
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