Country Report Morocco May 2009

Outlook for 2009-10

• The Economist Intelligence Unit expects the political scene 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 average 3.8% of GDP in 2009-10 as weaker GDP growth hits revenue and the government embarks on a major public investment programme.
• We have lowered our forecast for real GDP growth because of the worsening outlook for the EUMorocco's main export marketalthough a strong harvest in 2009 will mean that Morocco just avoids recession.
• We have lowered our forecast for export earnings and have raised our oil price forecast slightly. As a result, we now expect Morocco to continue to record a current-account deficit, albeit declining, in 2009-10.

Monthly review

• The UN Security Council has adopted a resolution (1871) on April 30th that extends the mandate of the UN Mission for the Referendum in Western Sahara (Minurso) by one year to April 30th 2010.
• Morocco has garnered some international support for its autonomy proposals for the Western Sahara but has been criticised for human rights abuses there.
• The global economic downturn is impeding Morocco's efforts to improve its infrastructure, particularly those large-scale projects dependent on foreign investment in the real estate and infrastructure sectors.
• Several foreign investors have delayed investment decisions over major infrastructure projects, including Tanger Med.
• In late April the tourism minister, Mohammed Boussaid, said that the initial Vision 2010 target to generate additional capacity of 85,000 tourist beds by 2010 had been cut to 35,000 beds, and the target date extended to 2016.
• Industrial action in the transport sector in opposition to a new traffic offences law has disrupted economic activity.
• Export earnings, particularly from phosphates, have fallen more sharply than import costs. Services earnings have also fallen.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;47;1
NAICS Code: 72;48;11