Thomas White Global Investing
Morocco Stamp
February 6, 2009
A Postcard from the Middle East
Morocco: The Best Emerging Market Performer of 2008

Agriculture is an important aspect of the Moroccan economy

The government is trying to sever the link between the Moroccan economy and agriculture, which provides a livelihood to more than 40% of Moroccans. With a good year such as 2008, when rainfall was plentiful, farming GDP could expand by 22% in the first quarter, boosting overall growth in 2009 by 2.9%.

Although Morocco has long been known as an exotic holiday destination, it is quickly earning acclaim as a survivor of the global economic meltdown. In an estimate based on the value of Standard & Poor’s Global Broad Market Indices, Morocco was declared the best performing country among emerging markets in 2008, limiting its losses to only 15.8%.

The study, which comprised 46 major stock indices from around the world, showed that the worst performers were the BRIC countries, which include some of the fastest moving economies – Brazil, Russia, India and China. Stock market performance reached all time lows in these countries, erasing some $17 trillion in share value worldwide, according to S&P. Markets from the Middle East figured among the top performers, with Israel coming in second, limiting its losses to 34.68%. In a year that faced the worst economic turmoil since the Great Depression, being rated as the best is certainly a feather in Morocco’s fez.

Morocco’s Casablanca Stock Exchange (CSE) is the second largest exchange in Africa after Johannesburg, and the largest in the West Africa and Maghreb (the three countries between the Atlas Mountains and the Mediterranean Sea). The CSE suffered a small loss of capital last year, compared to other markets. In 2008, its total market capitalization was $66.3 billion compared to $76.02 billion at the end of 2007. The downward trend that began late in 2008 continued into 2009. In January, the benchmark Moroccan All Shares Index (MASI) fell to below 10,000 points for the first time in more than a year.

Industry analysts are attributing the fall to psychological factors rather than real weaknesses in the Moroccan economy and perhaps rightly so. Morocco’s economy relies heavily on tourism, which gives it a firm international presence. Even with the onset of the sub-prime debacle, Morocco’s tourism industry registered a 7% growth in 2008 compared to 2007. Despite the positive figures, the Morocco Ministry of Tourism is cautious and has drafted new measures to protect the country from the fallout of the global economic crisis. Morocco also depends upon exports. The Moroccan market survived the worst effects of the sub-prime crisis and it was not until the third quarter that trading activity slackened. Morocco’s exports to the European Union, which account for two-thirds of the country’s trade volumes, rose 13% in the first five months of the year before it slowed down.

In order to rejuvenate its economy, Morocco has to achieve a higher growth rate. The Moroccan government predicted the country’s growth rate at 5.8% in 2009, but the World Bank tempered this to 4% in view of the global financial environment. To increase Morocco’s chances of a growth spurt this year, the government aims to increase investments by 24.3%, supporting new developments in key sectors like agriculture, energy, information technology and phosphate mining. To set the sluggish economy in motion, the government also hopes to boost exports and step up the purchasing power of the citizens.

While Morocco has certainly been affected by the financial turmoil, compared to other economies it has remained relatively insulated. With global heavyweights listed among the worst performers in 2008, Morocco has reason to cheer.


Image Credit: Richard Allaway under a Creative Commons License


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