North Africa Business Forecast Report Q3 2009

Publication Date	June 2009
Publisher	Business Monitor
Product Type	Report
Pages	50
ISBN Number	1746-5788
Product Code	BMI03959

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Summary

Algeria's finances will feel the impact of lower oil prices in 2009 - we are forecasting an average price of US$45.50/bbl for the OPEC basket this year, less than half that enjoyed in 2008. This will push the Algerian budget firmly into deficit, as the government will be reluctant to cut back on spending at a time when job creation is high on the political agenda. Furthermore, President Abdelaziz Bouteflika, who was re-elected in April, has reiterated his commitment to a large-scale expansion of Algeria's physical infrastructure, in addition to generous spending on health, education and housing.

In Libya, the government is also pouring money into infrastructure projects, with growth in government expenditure expected to remain robust throughout the forecast period. With oil revenues sharply down, this means a fiscal deficit in 2009, but the state still has a large accumulated surplus from previous years while the sovereign wealth fund is looking to flex its muscles and expand its investments abroad. This spending will generate economic activity in Libya, supporting job creation and enticing economic migrants from sub-Saharan Africa, while masking the fact that lower oil output (due to OPEC quota restrictions) could actually lead to a contraction of the economy in real terms.

Morocco's economy continues to weather the global economic storm fairly well, although exportoriented industries will undoubtedly have a bad year due to lower demand from Europe. That said, with a financial services sector that is insulated from the credit crunch, Morocco should quickly benefit from the global recovery, when it comes. For now, foreign investment will be less forthcoming, particularly in the real estate market, where huge interest had been generated by the expanding tourism sector. However, the construction sector still has plenty of room for growth, thanks to government investment in social housing.

Tunisia is also feeling the pinch from lower European spending on exports and reduced investment flows. However, we still see real GDP growth remaining positive, to the tune of 2.3%, and returning to its longer term trend of 4-6% over the remainder of our forecast period. In the short-term, we see some scope for public unrest due to rising unemployment. That said, there is little chance of President Zine el-Abidine Ben Ali not winning re-election

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: Exports Suffering All Round
Chapter 1.1: Political Outlook - Algeria
- Domestic Politics
- Amnesty Risks Entrenching Government Impunity
- The re-election of Abdelaziz Bouteflika as president of Algeria passed without any major surprises
Chapter 1.2: Economic Outlook - Algeria
- Economic Activity
- Oil Cuts Depress GDP Growth
- A reduction in oil output means lower real GDP growth in 2009, although like the rest of North Africa, Algeria will avoid recession
Chapter 2.1: Political Outlook - Libya
- Domestic Politics
- Growth Drives Inward Migration
- Robust economic growth and a slew of new construction projects will encourage immigration to Libya over the coming years
Chapter 2.2: Economic Outlook - Libya
- Economic Activity
- Growth To Slow On Oil Output Cuts
- Lower oil prices will massively reduce liquidity in Libya in 2009, although the government will keep spending the surplus of previous years
- Investment Climate
- Sovereign Wealth Fund Eyes Foreign Assets
- The Libya Investment Authority is set to become more prominent among oil-rich sovereign wealth funds, as it seeks to take advantage of the current global downturn to snap up foreign assets at reduced prices
Chapter 3.1: Political Outlook - Morocco
- Domestic Politics
- Corruption Concerns Cloud Election Campaigning
- The forthcoming local elections will provide an important barometer of public faith in the electoral system
Chapter 3.2: Economic Outlook - Morocco
- Economic Activity
- Growth To Slow, But Recession Unlikely
- We have maintained our forecast for 2.4% real GDP growth in Morocco in 2009, as the impact of lower exports and a sharp slowdown in private investment are offset by increased public sector spending
Chapter 4.1: Political Outlook - Tunisia
- Domestic Politics
- Iraq Attacks Highlight Islamist Threat
- While Tunisia continues to score highly in our political risk ratings, we highlight ongoing risks to stability, with recent events illustrating the continued existence of a committed radical Islamist network
Chapter 4.2: Economic Outlook - Tunisia
- Economic Activity
- Exports Down, Cheaper Imports Aid Budget
- Real GDP growth will remain positive this year, despite a drop in exports. On the import side, a drop in average commodity prices will help narrow both the current account and budget deficits
Chapter 5: Special Report
- The Outlook For Global Banking
- Business Environment Rating Outlook
Chapter 6: BMI Global Assumptions
- Global Assumptions
List of Tables
- Table: Alge ria Political Overview
- Table: ALGERIA - 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: LOAN-TO-DEPOSIT RATIOS, Selected States
- Table: LOAN GROWTH , Selected States
- Table: COMMERCI AL BANKING BUSINESS ENVIRO NMENT RATINGS, SELECTED STATES
- Table: GLOBAL ASSUMPTIONS
- Table: GLOBAL & REGIONAL REAL GDP GROWTH
- Table: EMERGING MARKETS
- Table: COMMODITIES