An in-depth analysis by the Moroccan Institute for Policy Analysis (MIPA), which shed light on the expanding relationship between Morocco and Germany, explained that the unraveling of global supply chains is now bringing Germany and Morocco into a closer economic partnership.
The automotive sector’s role
The value chains in car production form the foundation of the economic partnership between Germany and Morocco. Germany’s most recent participant in Morocco’s automotive ecosystem was through the automotive cable and unlocking systems manufacturer Stahlschmidt, which inaugurated its first phase of operations in June 2022 near the Renault factory in the industrial zone of the Tanger Med port.
The size of Stahlschmidt’s overall investment (€11 million) may indicate that the company anticipates shifting its Polish and Hungarian manufacturing operations to Morocco. “Germany’s ability to increasingly rely on Morocco derives from the overall robustness of Morocco’s automotive manufacturing ecosystem,” highlighted MIPA.
Prior to Russia’s invasion of Ukraine, the greatest category of Moroccan exports to Germany was automotive products, including both automobiles and parts, accounting for nearly 21% of all exports to Germany.
Beyond the automotive sector
The analysis spoke of engineering and business outsourcing in Moroccan German relations. Technology innovation was given particular attention in Morocco’s 2021–2025 Economic Acceleration Plan, and the country’s continuous development in higher value-added manufacturing is luring more German companies, like Opel.
By employing its expanding pool of engineers, MIPA described how Morocco has established five engineering outsourcing centers in Casablanca, Rabat, Tangiers, Fes, and Oujda, whose services are used by the German company FEV and other foreign businesses.
“Rabat anticipates the engineering outsourcing sector in Morocco to grow at 23% compounded annual growth rate through 2025,” explained the same source.
Trade between the two countries
Germany is Morocco’s eighth-largest export market, with $1.2 billion in exports from Morocco in 2021, and it’s also it’s seventh-largest import provider, contributing slightly more than $3 billion in commodities.
The trade imbalance between Morocco and Germany remains very small despite a slight worsening of the gap in 2021 as a result of Covid-19 since Moroccan exports to Germany increased at a rate that was more than twice as fast as German exports to Morocco between 2010 and 2019.
The nearly equal exchange rates reflect Morocco’s growing significance as a key player in the value chains of German industry, as German direct investment in Morocco grew from €0.18 to €1.32 billion over the same 2010–2019 timeframe.
“Despite the 2021 diplomatic crisis between the two governments, German-Moroccan business-to-business relationships remained largely unaffected,” noted MIPA. This refers to the 2021 diplomatic crisis that stemmed from Berlin’s position on Rabat’s autonomy plan for the Sahara.
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