Country Report Morocco September 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 and there will be widespread public disaffection with formal politics, particularly given the continued prominence of the monarchy in setting the policy agenda.
• Poverty and unemployment will be sources of discontent, and some Moroccans will turn to Islamist political movements as a result, but only a small minority of Moroccans are likely to support militant groups.
• Morocco's fiscal position has strengthened considerably in recent years. However, the fiscal account is expected to move from surplus to modest deficit in 2009-10 as weaker GDP growth hits revenue.
• The exceptional harvest (agriculture still accounts for around 15% of GDP and 40% of employment) means that Morocco should avoid a recession in 2009, although we still expect non-agricultural growth to be weak.
• Falling goods and services export earnings will be only partly matched by lower import costs in 2009. As a result, we expect Morocco to record a current-account deficit, albeit a narrower one, in 2009-10.

Monthly review

• The king, Mohammed VI, has marked the 10th anniversary of his ascension to the throne with a speech laying out a roadmap for major forthcoming reforms including to the judiciary and in decentralisation.
• The government has seized two publications for publishing an opinion survey of the king's reign. Although the articles were mostly favourable, the authorities have claimed they violated strictures on reporting the monarchy.
• The government has announced that the Office national d'eau potable, the state-owned water agency, and the Office national d'electricite, the public power utility, are to be merged into a single entity.
• Royal Air Maroc pilots have gone on strike repeatedly over the summer to protest against the recruitment of lower-paid foreign pilots.
• Exports have come under heavy pressure as a result of recessions in the major economies that are the main markets for Morocco's exports. Export earnings fell by 32.2% in the first seven months of 2009, year on year.
• The unemployment rate has continued to fall, averaging just 8% in the second quarter of 2009, largely owing to agricultural performance, but there have been job losses in some manufacturing industries.

This report covers the following industry codes:
SIC Code: 49
NAICS Code: 22