Country Report Morocco December 2008

Summary

The political outlook is expected to remain generally stable, with no serious challenges to the central role of the king, Mohammed VI.
Parliament will remain weak, with no party having a strong power base, and there will be widespread public disaffection with formal politics, particularly given the continued prominence of the monarchy in decision-making.
Poverty and unemployment will be sources of discontent and many Moroccans will turn to Islamist political movements as a result, but only a small minority of Moroccans are likely to support militant groups.
Despite improved tax penetration, the budget deficit is expected to exceed 3% of GDP in 2009-10 as weaker GDP growth hits revenue and the government embarks on a major public investment programme.
The Economist Intelligence Unit has lowered its forecast for real GDP growth given the worsening outlook in the EUMorocco's main export market. We expect the economy to grow by 3.7% in 2009 and 4.5% in 2010.
Lower international commodity prices will help to contain import spending, ensuring that the current account returns to surplus in 2009-10, despite lower exports of goods and services.

The Union socialiste des forces populaires, which is part of the current coalition government but performed poorly in the 2007 legislative election, has elected Abdelwahed Radi as its new secretary-general.
The king has expressed regret at Algeria's refusal to normalise relations with Morocco or to open the land border. Talks on the future of Western Sahara remain deadlocked.
The telecoms regulator, the Agence nationale de reglementation des telecommunications, has opened the tender procedure for the award of a third 2G mobile-phone licence.
The authorities have investigated reports of misconduct on the Casablanca Stock Exchange, but have found no evidence of serious market manipulation and only a limited problem relating to the publication of information.
The unemployment rate held steady in the third quarter of 2008 compared with the same period of 2007, at 9.9%, as growth in urban employment offset falling activity in rural areas.
Price growth has slowed in recent months but remains high by Moroccan standards. Average consumer price inflation for January-September eased to 3.8% after hitting 5.1% in January-July.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;70;65;49
NAICS Code: 52;72;53;22