Summary of Report -
Outlook for 2013-17
The political situation will be broadly stable in 2013-17, under the rule of the king, Mohammed VI. Protests will continue, but they will not pose a threat to the regime, which will respond with further modest political reforms.
The government will remain weak, despite an enhancement of its powers under the new constitution, which was approved in 2011, and there will continue to be disaffection with formal politics.
Abdelilah Benkirane, the leader of the Islamist Parti de la justice et du développement and prime minister since late 2011, will struggle to balance the demands of his secular coalition partners with those of his constituents.
The contested territory of Western Sahara will remain a major foreign policy issue. Ties with the Gulf Arab monarchies will strengthen.
The fiscal account will remain in deficit in 2013-17 as the government spends heavily on investment programmes, on subsidies and on raising public-sector pay in an effort to boost job growth and reduce political discontent.
Economic growth will remain linked to the performance of agriculture as well as the health of the European economy, Morocco's main export market. After rising to 4% in 2013, real GDP growth is expected to average 4.9% in 2014-17.
The current-account deficit will remain in deficit in 2013-17, but rising inflows from remittances and services will help to bring down the shortfall, especially after 2014.
After an eight-day fact-finding mission, the UN special rapporteur on torture said that the inhumane treatment of detainees in Morocco was "very frequent" and criticised the use of excessive force against protesters.
Real GDP growth in the second quarter of 2012 has been revised down to 2.3% year on year, with the drought-hit agricultural sector contracting by 9.6%.
The government agency in charge of monitoring agricultural production and imports has announced a 15% cut in the subsidy cap for imported soft wheat.
At its meeting on September 25th, the central bank kept its main policy rate unchanged at 3% but reduced the reserve requirement ratio to help boost liquidity in the flagging economy.
Largely reflecting a rise in the energy import bill, the trade deficit was 6% higher in January-August than in the same period of 2011.
The government has awarded a US$1bn contract to a consortium headed by a Saudi Arabian company for the design, construction and operation of a 160-mw solar power plant.
Country Report Morocco October 2012: , is available at: