Country Report Morocco January 2009

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 rising 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 further given the worsening outlook in the EUMorocco's main export market. We expect the economy to grow by 3.3% in 2009 and 4% in 2010.
Lower international commodity prices will help to push down import spending, particularly in 2009, ensuring that the current account returns to surplus in 2009-10, despite lower exports of goods and services.

A ministerial delegation led by the prime minister, Abbas el-Fassi, has visited Spain, holding meetings with the Spanish prime minister and other officials and signing a three-year 520m (US$760m) bilateral investment agreement.
Several arrests in recent months have highlighted the prominent role that a small number of Moroccan radical Islamists are believed to have played in planning terror attacks and assassinations in some European countries.
The fiscal position remains comfortable despite increases in public-sector wages in July and surging oil subsidy costs. The fiscal balance remained in surplus to the tune of Dh7.7bn (US$1bn) in January-October.
The finance minister, Salaheddine Mezouar, has announced new measures aimed at boosting the capital markets and improving accountability.
Morocco's money markets, which have been swamped over the past five years by unprecedented liquidity, have now tightened sharply.
The trade deficit widened sharply to Dh142.8bn in January-October, despite a marked rise in export earnings owing to stronger phosphate prices; export earnings are barely half the level of import spending.
Inward remittances and tourism revenue stagnated and foreign investment inflows fell by 17% year on year in January-October.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52