Brexit to impact Morocco’s economy
Casablanca - Morocco’s economy will be affected by the British decision to leave the European Union in both the short and long terms due to uncertainty in the EU market, a Moroccan economic expert said.
With Britain planning to leave the European bloc, Rabat will have to negotiate new trade agreements with London as customs duties will be reinstated.
Rachid Boutti, distinguished visiting professor at Universidad of Las Palmas de Gran Canaria and professor at ENCG Agadir, said the most noticeable effect “is the jittery financial markets that are likely to affect trade in terms of imports and exports”.
“The Brexit is set to trigger a period of uncertainty in Europe and in turn will impact Morocco’s trade (with the European Union) and GDP (gross domestic product),” he said.
Morocco had a trade deficit of almost $200 million with the United Kingdom in 2015, according to Morocco’s Exchange Office, with exports to Britain reaching $600 million.
About one-quarter of Morocco’s imports from Britain are passenger cars ($185 million) followed by petroleum products ($155 million). Morocco exports clothing, passenger cars and electrical equipment to the United Kingdom.
Moroccan Central Bank Governor Abdellatif Jouahri said Brexit’s effects on Morocco economy would be “limited”. “Britain’s exit from the EU will certainly have a tsunami effect on Europe but will only impact the Moroccan economy by 0.1 point (of GDP),” he said.
The value of the British pound tumbled after the “Leave” vote. For Britons planning to travel to Morocco, the dwindling currency will affect their purchasing power in the North African country.
Morocco has enjoyed an advanced status with the European Union since 2008. Several advanced status objectives were reinforced by an action plan formally adopted in 2013.
However, scenarios that are likely to affect Morocco’s economy are starting to emerge following Britain vote to leave the bloc.
“Britain’s trade ties with Morocco will remain unchanged if London negotiates with the 27 EU members its inclusion in the European Economic Area to obtain a status similar to the Norwegian one that includes the free movement of capital, services, goods and people,” said Boutti.
Brexit campaign leaders hope that Britain can still enjoy advantages of the EU internal market for business while denying EU citizens entry to the United Kingdom to alleviate Britons’ concerns about unlimited EU immigration.
French and German leaders, however, ruled out this option.
“You cannot have the freedom of capital movement, the freedom of goods, freedom of services and then say, ‘When it comes to people, stay put!’ Well no, it doesn’t work that way,” said French President François Hollande.
German Chancellor Angela Merkel said: “Whoever wants to leave this family cannot expect to have no more obligations but to keep privileges.”
There is likely to be a decline in trade between Britain and Morocco with customs duties coming into effect.
Boutti said Morocco will have to negotiate new trade agreements with Britain once Brexit takes effect. The new deals might be more beneficial to Morocco’s agricultural exports since the British market will be free from EU quotas on agricultural products.
The EU funding of Morocco is likely to be affected in the long run by Brexit since the United Kingdom’s net contribution to the EU budget, estimated at about $11.3 billion in 2015, will no longer exist.
Another sticking point is the open skies agreement Rabat signed with the European Union in 2006, which helped Morocco increase the number of tourist arrivals. Rabat will have to negotiate an agreement with London as the British travel market is vital to Morocco’s economy.
About 500,000 British nationals visit Morocco every year and there are almost ten daily flights between the two countries.