North Africa Business Forecast Report Q2 2009

Publication Date	March 2009
Publisher	Business Monitor
Product Type	Report
Pages	56
ISBN Number	1746-5788
Product Code	BMI03521

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Summary

North Africa: Navigating Through The Global Crisis

While we are not forecasting recession for any North African states this year, Algeria is in the best position to weather the global downturn. Oil export revenues will obviously fall dramatically, but hydrocarbons output will continue to rise - despite OPEC production cuts - thanks to an expansion of the gas sector. Public sector spending is forecast to increase as the government pushes ahead with its ambitious economic development plan. However, we continue to have concerns regarding the clampdown on foreign investment which, combined with lower oil prices, has already resulted in reduced interest from foreign oil firms for production concessions.

Foreign investment is a hot topic in Libya, with Colonel Muammar Qadhafi hinting at a potential re-nationalisation of the oil industry. This is not our core scenario, but the recent revision of contract terms by French oil company Total sends out a bad signal at a time when the industry is becoming more picky in its choice of investments. That said, Libya's energy sector still has plenty of growth potential, while the ongoing need for new infrastructure will help the country avoid the sort of downturn that we are forecasting for the Gulf region.

Morocco's economy is highly exposed to the European market, which we are forecasting to suffer a recession in 2 009. All export sectors are at risk, including textiles, tourism and automotives, while investment from Europe (and, to a lesser extent, the Gulf), will be less forthcoming. In light of this, we are forecasting unemployment to rise this year, posing risks to political stability.

Unemployment continues to disproportionately affect the young and the well educated, and with the harsh global climate implying fewer opportunities for university graduates, we have revised our short-term political risk ratings downwards.

In Tunisia, exports will also take a hit from reduced European demand for goods and services.

In addition to consumer goods, Tunisia's mining industry and nascent oil sector are expected to contract in 2 009, at least in nominal terms. The knock-on effect on jobs will inspire greater consumer caution, and we are forecasting a slowdown in household consumption growth. That said, Tunisia has historically been very resilient to global growth fluctuations, not least due to the government's ongoing commitment to economic reform and better trade relations. This stance is unlikely to change; indeed, Tunisia continues to pursue closer economic ties with trade partners in Europe, the Middle East and Africa.

Content

BMI Ratings
BMI Risk Ratings - Algeria
BMI Risk Ratings - Libya
BMI Risk Ratings - Morocco
BMI Risk Ratings - Tunisia
Africa - Ratings League Executive Summary
North Africa: Navigating Through The Global Crisis
Chapter 1.1: Political Outlook - Algeria
- Domestic Politics
- Boycott Threatens Presidential Election
- Political continuity is almost assured in Algeria, with President Abdelaziz Bouteflika having officially declared his
- candidacy in the April presidential election.
Chapter 1.2: Economic Outlook - Algeria
- Economic Activity
- Growth Strong But Investment Outlook Casts A Shadow
- We are forecasting a global trend-busting 5.7% expansion in Algerian real GDP in 2009, driven by hydrocarbons output.
Chapter 2.1: Political Outlook - Libya
- Domestic Politics
- Energy Nationalisation: Another Qadhafi Daydream?
- There is little evidence so far that Libya will follow through on threats to nationalise its oil industry.
Chapter 2.2: Economic Outlook - Libya
- Economic Activity
- Powering Through The Global Downturn
- Rising gas output will help the Libyan economy grow at a healthy pace in 2009.
Chapter 3.1: Political Outlook - Morocco
- Domestic Politics
- Unemployment To Rise Up Political Agenda
- Unemployment will rise in Morocco in 2009, with all export industries at risk.
Chapter 3.2: Economic Outlook - Morocco
- Economic Activity
- Fiscal Risks As Economic Outlook Worsens
- While Morocco will avoid recession in 2009, we are forecasting a sharp decline in real growth to 2.4%.
Chapter 4.1: Political Outlook - Tunisia
- Domestic Politics
- Keeping Foreign Policy Options Open
- Tunisian foreign policy will remain focused on deepening trade ties and enhancing economic partnerships.
Chapter 4.2: Economic Outlook - Tunisia
- Economic Outlook
- Export Sector To Bear The Brunt In 2009
- In light of the global economic climate, the immediate future is hardly bright for Tunisia.
Chapter 5: Special Report
- China
- A Seismic Upheaval In 2009?
- One of the biggest - and least discussed - 'wild cards' that could rear its head in 2009 is dramatic political
- upheaval in China.
- United States
- Europe
- Big Trouble For European Banks In 2009
- The deteriorating global macroeconomic outlook, high levels of leverage, and a broken business model will
- combine to spell trouble for the financial services sector in 2009.
Chapter 6: BMI Global Assumptions
- Global
- Economic Activity
- Monetary Policy
- Commodities
List of Tables
- Table: Algeria Political Overview
- Table: ECONOMIC ACTIVITY
- Table: Libya Political Overview
- Table: LIBYA - ECONOMIC ACTIVITY
- Table: Morocco Political Overview
- Table: MOROCCO - ECONOMIC ACTIVITY
- Table: Tunisia Political Overview
- Table: Tunisia ECONOMIC ACTIVITY
- Table: Banks' Leverage Ratios
- Table: Assets As % of Home Country GDP
- Table: Assets As % of Home Country GDP When Eurozone Is Considered 'Home Country'
- Table: Exposure As % of Total Exposure To Region
- Table: Banks' Foreign Exposure (US$ mn)
- Table: Exposure As % of National GDP
- Table: Global Assumptions
- Table: GLOBAL AND REGIONAL REAL GDP GROWTH, % chg y-o-y
- Table: Developed States, Real GDP Growth Forecasts
- Table: Emerging Markets, Real GDP Growth Forecasts
- Table: DEVELOPED MARKET EXCHANGE RATES
- Table: EMERGING MARKET EXCHANGE RATES