By Heba Saleh in Cairo
Moroccans seem to be programmed to welcome rain no matter its immediate impact. So even as a late-night downpour obstructs vision and big hailstones pelt cars, people smile and tell you it brings them prosperity.
In this poor north African country, agriculture is central to the economy. It accounts for 15 per cent of gross domestic product but provides a livelihood to 40 per cent of the workforce. Thanks to plentiful rain, this year's growth is expected to reach 6.5 per cent, up from 2.7 per cent last year.
In the face of Morocco's continued vulnerability to the weather, businessmen and experts say reforms driven by the government have strengthened the economy, enabling the country to absorb the shock of higher energy and cereal prices.
The only nation in the Maghreb without oil or gas and one beset by income disparities, housing shortages and an inefficient education system, Morocco nonetheless appears to have managed to maintain economic stability in the face of global inflation. The government strategy is to shift the economy away from agriculture to create jobs and find new engines of growth.
"The numbers this year are certainly showing the very great resilience of the Moroccan economy in the context of international turmoil," said Francoise Clottes, head of the World Bank office in Morocco.
This is largely due to strong revenue flows from sources outside agriculture that have enabled the government to spend far more on its food and fuel subsidy programme - described by the International Monetary Fund as the "most important policy issue facing the authorities" - while maintaining a small deficit in the region of 3 per cent.
Remittances from Morocco's 3m expatriates, mostly in Europe, have gone up 5 per cent to $3.5bn in the first six months of the year.
Increased revenue has also come from tourism, and corporate tax receipts which rose 70 per cent in the first half of the year due to higher investment and an improved collection system.
Morocco has also had help from its wealthier friends, Saudi Arabia and the United Arab Emirates, in the form of $800m (€570m) in direct budgetary support.
"From 1996 to 2004 nothing was happening in the economy," said a Moroccan investment banker. "But starting from 2005 things started to improve thanks to all the public investment in infrastructure and the private investment in real estate and tourism."
The booming construction sector - driven by a huge public works programme - has helped reduce unemployment from 11.4 per cent in 2003 to 9.1 per cent while plans to promote investment in areas such as automotive parts, offshoring, food processing and electronics have started to pay off.
The impact has been to raise foreign direct investment from $500m in 2002 to $3bn last year. The biggest single investment came from Renault, the French carmaker, which is putting $1bn into what will become its biggest factory in Africa to produce low-cost cars and vans destined for export to emerging markets.
Renault has been attracted by Tanger-Med, near Tangiers, northern Morocco's deepwater port and trans-shipping hub which when completed will be the largest in the Mediterranean.
But the issue of the growing subsidy programme remains to be tackled. It is not a long-term solution to Morocco's economic problems and the IMF in July recommended better targeting of subsidies to the needy to ensure the government could meet the costs of its economic priorities.
Though no one expects the dilemma over subsidies to be resolved soon, ministers have at least started talking openly about restructuring the system, something observers describe as a first in Morocco.
In this poor north African country, agriculture is central to the economy. It accounts for 15 per cent of gross domestic product but provides a livelihood to 40 per cent of the workforce. Thanks to plentiful rain, this year's growth is expected to reach 6.5 per cent, up from 2.7 per cent last year.
In the face of Morocco's continued vulnerability to the weather, businessmen and experts say reforms driven by the government have strengthened the economy, enabling the country to absorb the shock of higher energy and cereal prices.
The only nation in the Maghreb without oil or gas and one beset by income disparities, housing shortages and an inefficient education system, Morocco nonetheless appears to have managed to maintain economic stability in the face of global inflation. The government strategy is to shift the economy away from agriculture to create jobs and find new engines of growth.
"The numbers this year are certainly showing the very great resilience of the Moroccan economy in the context of international turmoil," said Francoise Clottes, head of the World Bank office in Morocco.
This is largely due to strong revenue flows from sources outside agriculture that have enabled the government to spend far more on its food and fuel subsidy programme - described by the International Monetary Fund as the "most important policy issue facing the authorities" - while maintaining a small deficit in the region of 3 per cent.
Remittances from Morocco's 3m expatriates, mostly in Europe, have gone up 5 per cent to $3.5bn in the first six months of the year.
Increased revenue has also come from tourism, and corporate tax receipts which rose 70 per cent in the first half of the year due to higher investment and an improved collection system.
Morocco has also had help from its wealthier friends, Saudi Arabia and the United Arab Emirates, in the form of $800m (€570m) in direct budgetary support.
"From 1996 to 2004 nothing was happening in the economy," said a Moroccan investment banker. "But starting from 2005 things started to improve thanks to all the public investment in infrastructure and the private investment in real estate and tourism."
The booming construction sector - driven by a huge public works programme - has helped reduce unemployment from 11.4 per cent in 2003 to 9.1 per cent while plans to promote investment in areas such as automotive parts, offshoring, food processing and electronics have started to pay off.
The impact has been to raise foreign direct investment from $500m in 2002 to $3bn last year. The biggest single investment came from Renault, the French carmaker, which is putting $1bn into what will become its biggest factory in Africa to produce low-cost cars and vans destined for export to emerging markets.
Renault has been attracted by Tanger-Med, near Tangiers, northern Morocco's deepwater port and trans-shipping hub which when completed will be the largest in the Mediterranean.
But the issue of the growing subsidy programme remains to be tackled. It is not a long-term solution to Morocco's economic problems and the IMF in July recommended better targeting of subsidies to the needy to ensure the government could meet the costs of its economic priorities.
Though no one expects the dilemma over subsidies to be resolved soon, ministers have at least started talking openly about restructuring the system, something observers describe as a first in Morocco.
The Financial Times