Morocco: bright outlook, twin deficits pose downside risks

Morocco is set to be the best performer among the resource-poor Arab economies this year, supported by a comparatively stable political and macroeconomic environment and a rebound in the agricultural sector. That said, the recession in the euro-zone and the country’s twin budget and current account deficits are downside risks. Hence, a re-escalation of the euro-crisis or slippages on subsidy reforms would be causes for concern. But our base case is that Moroccan GDP will grow by 3.5% this year.