Morocco Country Risk Report Q1 2016
Despite not possessing hydrocarbon wealth, the Moroccan economy will remain a relative outperformer in North Africa over the medium term. Investor interest in the country as an export-oriented manufacturing hub for the European market and increasingly to West Africa, as well as its relative security compared with the rest of the Middle East and North Africa (MENA) region, will bode well for Morocco's underlying growth momentum in the next few years.
Morocco's foreign policy will remain stable over the coming years, aimed at strengthening its relationship with the EU and the Gulf Cooperation Council and looking to West Africa for trade and investment opportunities. The Western Sahara issue will remain at the forefront of Rabat's foreign policy agenda, and we do not see any significant progress taking place on this issue in the near future.
Morocco will outperform in the MENA region in 2015 and 2016 on the back of a good harvest, improvements in the external sector and a strong investment outlook. We forecast real GDP growth to reach 4.8% over 2015 and 3.8% in 2016, significantly up from 2.4% in 2014.
The gradual coming on stream of new energy sources over the next five years – as part of the National Energy Plan 2020 – will reduce pressure on Morocco's current account and boost the country's attractiveness for foreign investors. This structural evolution will benefit the country's economic growth over the next decade.
Average annual inflation in Morocco will pick up to 1.9% in 2015, from 0.4% in 2014, amid rising food prices and stronger economic growth.
This will allow the Central Bank to maintain its current benchmark interest rate at 2.50% throughout the year.
- Executive Summary
- Core Views
- Key Risks
- Chapter 1: Political Outlook
- SWOT Analysis
- BMI Political Risk Index
- Domestic Politics
- Local Elections Pave Way For Renewed PJD Victory In 2016
- The Justice and Development Party's strong results in Morocco's local elections will pave the way for another plurality victory in the
- September 2016 legislative ballot, with relatively high economic growth and low unemployment over the coming quarters further
- strengthening Prime Minister Abdelilah Benkirane's position ahead of the vote.
- TABLE: POLITICAL OVERVIEW
- TABLE: SEPTEMBER 2015 REGIONAL AND MUNICIPAL ELECTION RESULTS
- Long-Term Political Outlook
- Challenges For The Coming Decade: Scenarios For Change
- The ongoing political and economic reforms undertaken by the government in recent years underpin our view that Morocco possesses
- one of the most stable political climates in the region. However, high economic disparities in the country and rising corruption could lead
- to social unrest of the type that spread across the Arab world in 2011. In addition, the lure of radical militancy will continue to appear as
- a way out for young people, as the significant number of Moroccan nationals fighting with radical jihadist group Islamic State in Iraq and
- Syria attests.
- Chapter 2: Economic Outlook
- SWOT Analysis
- BMI Economic Risk Index
- Economic Growth Outlook
- Navigating Through 2016 Slowdown
- Morocco's economic growth will slow in 2016 as agricultural output reverts to the mean following a record-high harvest in 2015,
- impacting private consumption and headline growth. Nevertheless, the country will remain on track towards economic diversification,
- attracting high levels of foreign direct investment as it benefits from its relative security, favourable geographic location and the
- government's pro-investment stance.
- GDP By Expenditure Outlook
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: FIXED INVESTMENT FORECASTS
- TABLE: NET EXPORTS FORECASTS
- Monetary Policy
- Minor Rate Hike In 2016
- There will be limited changes in Morocco's monetary policy stance over the coming quarters, as low inflation, weak credit growth and
- worries surrounding the resilience of economic activity lead the central bank to only marginally hike rates in H116. We forecast Bank
- Al-Maghrib's policy rate to stand at 2.75% at the end of 2016, compared with 2.50% at the end of 2015.
- TABLE: MONETARY POLICY
- Fiscal Policy And Public Debt Outlook
- Subdued Growth, Elections Slowing Down Fiscal Improvements
- Morocco's fiscal deficit will continue to narrow in 2016, albeit at a slower pace than in 2015. Most of the subsidy reform has already
- been carried out, the Moroccan government will hold back on austerity measures because of parliamentary elections being held in late
- 2016, and slower economic growth will impact revenue streams.
- TABLE: FISCAL POLICY
- TABLE: SELECT 2016 FORECASTS
- Chapter 3: 10-Year Forecast
- The Moroccan Economy To 2024
- Diversified Economic Base Underpins Bright Future
- An increasingly diversified economic base, an attractive geographical position and strong investments in tourism and energy infrastructure are major positives underpinning Morocco's long-term economic growth trajectory. Nevertheless, we caution that several issues, such as persistently high unemployment and poverty, combined with shortcomings in the quality of education, if not addressed properly, could pose serious threats to our positive long-term view.
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Chapter 4: Operational Risk
- SWOT Analysis
- Operational Risk Index
- Operational Risk
- TABLE: OPERATIONAL RISK
- TABLE: MIDDLE EAST AND NORTH AFRICA - EDUCATION RISK
- TABLE: GRADUATES FROM MOROCCAN UNIVERSITIES BY SUBJECT
- Government Intervention
- TABLE: MIDDLE EAST AND NORTH AFRICA - GOVERNMENT INTERVENTION RISK
- TABLE: MOROCCO INCOME TAX LEVELS
- Chapter 5:BMI Global Macro Outlook
- Global Outlook
- Exit The Dragon
- TABLE: GLOBAL ASSUMPTIONS
- TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
- TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
- TABLE: EMERGING MARKETS, REAL GDP GROWTH, %