Executive Summary

Relatively strong macroeconomic indicators coupled with stubborn structural problems characterize the Moroccan economy. Morocco's inflation levels are on par with industrialized countries, and foreign currency reserves provide approximately six months of import coverage. Despite these strong macroeconomic figures, however, economic growth has been anemic in Morocco over the last decade, partially as a result of dependence on agricultural and the recurrence of drought. Two consecutive years of worsening drought have led the economy to shrink by 0.7 percent in 1999, with growth predictions in 2000 of only 0.7 percent.

The government has made progress in reforming Morocco's economy. Important steps have been taken to make the public tender process more transparent, update Morocco's intellectual property rights legislation, develop a specialized commercial court system, and aggressively liberalize the telecommunications market.

Morocco offers significant investment opportunities, particularly as a packaging and assembly base because of its strategic location for exporting into North and Francophone Africa, Europe and the Middle East. Significant incentives exist for import of capital equipment and raw materials for re-export. The tourism sector is not progressing as expected in contrast to the huge potential offered by Morocco's coastline, deserts, mountains and historic cities.