Market: General
- Published Date: 23 Nov 2011
- Report Type: Country Report
- Country: Morocco
- Number of Pages: 35
- View Table of Contents
Morocco Business Forecast Report Q1 2012
Despite not possessing hydrocarbon wealth, the economy will remain a relative outperformer in North Africa over the medium term. On top of a very low base, strong interest from foreign investors in terms of developing the country into an export-oriented manufacturing hub for the European market, coupled with a burgeoning tourism industry, should bode well for underlying growth momentum through 2015.
Anti-government demonstrations will continue into 2012, as some of the largest protest groups (including the February 20 movement) are unlikely to be satisfied by the constitutional reforms introduced in July 2011. While we do not consider Mohammed VI’s position to be under threat, these demonstrations could nevertheless obstruct business activity.
Major Forecast Changes
We have revised down our projection for Morocco’s budget deficit in 2012 from 5.3% of GDP to 4.3% of GDP. Recent pledges of foreign aid from the GCC – coupled with signals from the government that it intends to resume its fiscal consolidation drive in the near future – are likely to ease the country’s fiscal position going forward.
On the back of sharply-declining food prices, we now expect CPI to come in at 1.5% in 2011, down from our previous forecast of 2.0%. We are sticking to our forecast for inflation of 2.0% in 2012.
Key Risks To Outlook
Our forecasts for both economic activity and fiscal policy assume that Morocco will benefit from significant inflows of foreign aid from the GCC and other organisations in 2012. Should this assistance fail to materialise, it would pose serious downside risks to the country’s outlook.
Overexposure to the southern European market, particularly Spain, could prove problematic given the ongoing sovereign debt concerns of the eurozone.
