Morocco

2023-02-20

Situated at the north-western corner of Africa, Morocco is included in multiple overlapping geographical areas: Africa, the Greater Arab Maghreb and the Middle East and North Africa (MENA) region. Morocco has a land mass of 446,550km² and a total coastline of 1,835km and is bordered by Algeria to the east, Mauritania to the south, and the Strait of Gibraltar to the North, separating it from Spain by less than 15km. It has two seafronts – the Atlantic Ocean to the west and the Mediterranean Sea to the north. This places Morocco strategically between Africa and Europe.

Morocco is a constitutional monarchy with an elected parliament. It has a population of 37 million people and a GDP of US$143bn, and its currency is the Moroccan dirham.

With a growth rate of 7.9%, the Moroccan economy rebounded in 2021, but several shocks led to an abrupt deceleration of economic activity, and GDP growth dropped to just 0.3% in the first quarter of 2022. These shocks included the impact of yet another drought, the third in the last four years, which lead to a sharp contraction in agricultural GDP. In addition, as an importer of energy and food, Morocco was severely affected by the commodity price shocks triggered by the war in Ukraine. Real GDP growth is expected to recover to 3% in 2023 after slowing to 1% in 2022.

Standard corporate tax rates in Morocco are progressive, from 10% on income under MAD300,000 (US$34,035) to 31% on income of over MAD1m (US$113,450), and the standard VAT rate is 20%.

Inflation accelerated from 0.2% to 0.7% in 2020 with food prices rising 0.9%. Inflation is expected to rise from an estimated 0.8% in 2021 to 1.2% in 2022, according to the International Monetary Fund.

A recovery plan was defined by the government in its 2021-2023 plan which revolves around the modernisation and digitalisation of commerce. Projects include establishing an incubator supporting digital startups with products and solutions for merchants, digitalising local commerce and generalising mobile payment. The minister of industry said the plan also includes boosting small and medium industrial companies and substitution of imports by local production, with support valued at MAD34bn (US$3.86m).

There are a number of specific financial, tax and customs exemptions and agreements to encourage investment. Declining foreign direct investment in 2018 prompted the government to introduce a five-year corporate tax holiday for new industrial companies and it also signed agreements with several countries to avoid double payment of income tax.


Electricity costs are generally regarded as expensive in Morocco as the country imports 97% of its energy resources.


Sources: Who Owns Whom sector reports, CIA Factbook, African Development Bank, World Bank, Trading Economics, African Statistical Yearbook and IMF.