Morocco Facing the global economic crisis For faster growth and more widely shared prosperity
M. Nizar BARAKA Minister of Economic and General Affairs
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I - Morocco : economy advantages II - The global economic crisis impacts III - Our strategy to mitigate the crisis effects
IV - A new governance style 1
I - Morocco : economy advantages A strong and diversified growth Stable macroeconomic framework Strong and healthy financial system A more open economy and a more attractive economy A decreasing unemployment rate An Improving level of life 2
A strong and diversified growth An increasing average growth
Global GDP
in%
Average growth: 5,1%
Average growth : 3,3%
9 8 7 6 5 4 3 2 1 0
1999 2000
2001 2002 2003
2004 2005 2006
2007 2008
An increasing Non agricultural growth
GDP
Average growth: 4,3%
Average growth: 5,4%
7 6 5 4 3 2 1 0 1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
3
Stable macroeconomic framework % GDP
A balanced budget
Current account surplus between 2001 and 2007
3,8%
4%
2,9%
3% 2% 0,7%
1% 0%
0,3%
0,5%
-0,8% -1,4%
-1%
-2,1% -2,6%
-2%
-3,2%
-3%
-3,1%
-1,8%
-3,0%
-1,5%
-0,2%
0,0%
-4% -4,2%
-5% -6%
-4,4%
Overall position privatization income
-2,0% -3,9%
-4,1%
subsidies excluded (fuel, cereals)
excluded
-4,0%
% GDP 5 4
2 1 0
-5,2%
-5,5%
-1
-7% 2001
2002
2003
2004
2005
2006
2007
Situation proche de l’équilibre
3
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
-2
In % 8
A mastered inflation 6.2% between 1990 and et 1995
A decrease in public and external debt
% GDP
point -47,8 s 14,3
60,9 6
1,9 % between 1996 and 2008
16,5
4
10,2 2003
2
2004
2005 public debet
2006
2007
2008
external debt
0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
4
Strong and healthy financial system A solid financial sector supporting development In % of GDP
Volumes in Billions USD
86
Average growth: 19%
61
Deposits
72 31
2003
Banking g sector
2003
2008
Average growth: 18%
2008
81
69
49
25
Loans 2003
2008
Average growth: 30%
Capital markets
Market capitalization
2003
2008
82
69 43
22
2003
2008
2003
2008
5
Strong and healthy financial system A solid financial sector supporting development An increasing credits extended to economy In billions USD +30,8%
80000 60000 40000 20000 0 2003
In %
2004
2005
2006
2007
2008
A continued decline in interest rates 14,00%
52 w eeks
12,00%
2 years 10,00%
5 years
8,00%
870 basis points 900 basis points 900 basis points
6,00% 4,00% 2,00% 0,00% 1993
1998
2000
2004
2007
2008
6
A more open economy and a more attractive economy
An increasing opening rate of the economy In %
100
+46,6%
80 60 40 20 0 2003
2004
2005
2006
2007
2008
Commitment to Free Trade and Regional Integration Positive evolution of Foreign Direct Investments
In Millions USD 5000 4000 3000 2000 1000
+300%
0 1999 2000 2001 2002 2003 2004 2005 2006 2007
7
A more attractive economy MULTIPLE FDI PROJECTS COMING ON STREAM IN MOROCCO
Automotive Automob
ile
- BPO Offshoring Offshoring
- BPO
Aeronautics Aéronautiq ue
Electronics
STMicroelectronics
STMicroelectronics
Textile
Food Industry
Attractivity is a reality An increasing number of franchisees
+470 franchisees since 2002
Clothing, 26%
+40 franchisees en 2008
catering , 7% Furniture, 7% Shoes, 5% 5
8
A proactive employment policy A decreasing unemployment rate In %
23 21 19 17 15 13 11 9 7 5
22
Urban unemployment rate
14,7 National unemployment rate
13,8
1999
9,6
2000
2001
2002
2003
9
2004
2005
2006
2007
2008
9
An Improving level of life Treasury debt
GDP per capita (purchasing power parity)
A significant improvement of purchasing power 5000 4500
Annual Average growth : 6,3%
4000 000 3500 3000 2500 2000 1500 1000 1999
2000
2001
2002
2003
19
2004
2005
2006
2007
2008
10
Improvement of level life
Decreasing poverty and vulnerability Poverty 30 25 20 15 10 5 0
28
25,1
16,5 10,4
1994
-42%
15,3 7,6 1999
urban area
2001
rural area
19
-41%
-37%
2004
14,5 14 5 9 4,8 2007
pauvrety rate
11
II -The global economic crisis impacts
1 - A more resilient economy toward exogenous chocks
2 - The spreading channels of the crisis
3 - Global economic crisis : the challenges
12
1-A more resilient economy toward exogenous chocks Toward regular shocks associated with rainfall volatility
diversification of the GDP growth now less volatile
15 10 5
20 08
20 07
20 06
20 05
20 04
20 03
20 02
20 01
20 00
19 99
19 98
19 97
19 96
19 95
19 94
19 93
19 92
19 91
19 90
19 89
19 88
19 87
19 86
19 85
19 84
19 83
-5
19 82
0 19 81
-10
13
1-A more resilient economy toward exogenous chocks
Japon Canada Suisse Allemagne Pays-bas Norvége Portugale Danmark France Italie Suéde Autriche Irelande Zone euro Luxembour Malte RoyaumeFinlande Maroc Slovaquie Pologne Etats-Unis Nouvelle Taiwan Algérie Gréce Espagne Australia Belgique Chypre Corée du HongKong Israel Mexique Tunisie Pérou Brésil Thailande Slovenie Malaise Hongrie Chine Singapour Tchéquie Uruguay Croatie Colombie Inde Syrie Roumanie Equateur Chili Koweit Argentine Indonesie Bangladesh Philippines Estonie Turquie Liban Arabie Egypte Pakistan Islande Bulgarie EAU Russie Jordanie Vietnam Ukraine Iran Venezuela
0
5,1 Subsidies 4
0,5 2
2008 2007 2006 2005 2004 -2
Morocco is among countries that mastered inflation at low level 25
Budget evolution -4
30
Toward energy and food crisis: Budgetary capacity to fund subsidies
% GDP 6
0
-6 6
20
15
10
5
14
1-A more resilient economy toward exogenous chocks Toward Financial crisis: A sound financial system
Morocco depends weakly resources currencies 80% 70%
External liabilities of banks represent 1.2% of their resources.
60% 50%
banking sector Non banking Sector Mediane
40% 30%
The commitments in foreign currencies of enterprises represent just 3.3% of loans.
20% 10% 0% Hongrie
Bulgarie
Roumanie
Slovaquie
Tchéquie
Pologne
Malaisie
Ukraine
Chili
Turquie
Uruguay
Vietnam
Egypte
Philippines
Pérou
Tunisie
Brésil
Maroc
Inde
Afrique du Sud
Indonesie
Mexique
Thailande
Argentine
Colombie
Chine
Equateur
Source: BRI
Moroccan banks do not hold claims "toxic"
15
2- The spreading channels of the economic crisis Expected slowdown on the external demand in 2009 EVOLUTION OF THE GLOBAL DEMANDINDEX
255
EVOLUTION OF MOROCCAN EXPORTS INDEX 1998-2009
235
Mondial demand
215
Demande mondiale exportations Exports Demande zone euro
195
European demand 175
155
135
115
95 1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
16
2- The spreading channels of the economic crisis -3,5%
60000
-2,4%
40000 -23,3%
20000 0 2006
2007
2008
voyages transferts MRE Recettes investissements Decrease in Moroccan migrants money transfers (2,4%) Decline in tourism incomes (3,5%) Regression of FDI flows (23,3%)
17
3 - Global economic crisis : the challenges Growth slowdown of non-agricultural sectors Increase in unemployment
Increase in current account deficit
Less external financings
18
III - Our strategy to mitigate the crisis effects
More support to the domestic demand
Strategy
Support sectors affected by the crisis
Prepare the after crisis
19
1- More support to the domestic demand Growth
Accelerate the pace of big structuring projects In Billion Moroccan dhs
An increasing public investment
140 + 65 %
120 100 80
+ 13,8 %
60 40 20 2002
2003
2004
2005
2006 5
2007
2008
2009 20
1- More support domestic demand Major infrastructure development programs
Highways, roads and railways: 1’000 km of highways, 15’000 km of rural roads and railways
Major integrated infrastructures (e.g., « Tanger Med »): launch of a port in the North of Morocco at international standards, one of the top 3 ports in the Med
Energy policy: massive investment programs in power generation and clean renewables and liberalization agenda
Utilities: massive Utiliti i d development l t off rurall electrification l t ifi ti (PERG) (PERG), water t distribution (PAGER) and waste management Sustainable development / Water resources: modernization of water efficiency systems in agriculture and new sustainable sources (pipeline, desalinization, dams)
USD 10-15 bn
USD 2-3 bn
USD 2 bn
USD 1.5 bn
USD 6 bn
Social Housing and urban development (200’000 houses p.a.) USD 15 bn
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1- More support domestic demand TangerMed: an example of integrated development plan An integrated Logistics Hub • 14 kms from Europe • Top 3 ports in Mediterranean • Full logistics integration
• Breakthrough developments • in industry in record time
Automobile
+
35 000 to 40 000 jobs in past 5 years
• About €600 millions investment • 400 000 cars produced yearly (for export) • Over 35 000 jobs • 15-20 activities locally integrated 22
1- More support domestic demand
Protect purchasing Income improvement power Mastered Prices Reinforcement of social security Designing a conditional cash transfer program Setting an insurance for job loss Enlargement of the health care coverage Enhancing human development National Initiative for Human Development Enhancement of rural zones
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2- Supporting sectors affected by the crisis
Exports activities : the need to preserve jobs
Financial support :creating a guarantee fund to improve the financial situation of firms
Commercial support : Support marketing efforts to find new destinations for export (creation of a fund to support exports)
Social support : giving financial support the employer charges (100%) in affected sectors such automobile, textile and leather
Tourism : preserve the sector attractiveness (“cap 2009” plan)
24
3- Prepare for the after crisis coherent agenda of structural reforms Agriculture Morocco green plan
Energy strategy
Industry National pact of development
Capacity building Education and training
Plan Azur
Water and environment strategy
Tourism strategy Azur Plan
25
IV - A new governance style Moralization and civism
Contracting C t ti partnership
Institutional dimension
Mandatory Asset declarations Creation of anti corruption agency Creation of a Special Control Unit Against Money Laundering
With : Private sector Public companies (contractual programs) Social partners
Launch of the “competitiveness council” Creation of the Moroccan agency to promote investment Creation of agency to promote agriculture Creation of the comitee of business climate 26
Thank you for your attention
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