- Analysts of the International Monetary Fund (IMF) indicate that the boom years of the Moroccan economy may near an end. International price hikes and the growing need for subsidies to meet the poor majority's needs may slow down growth.
Managing IMF Director Dominique Strauss-Kahn on a current visit in the Moroccan capital Rabat was vague when describing running economic developments in the North African kingdom. He rather praised the King, his government and Moroccan financial institutions for the "strong economic gains in recent years."
Morocco has seen impressive economic growth during the last years, to some degree driven by a boom in tourism and the property market. In 2006, GDP growth was at a record 8.0 percent. This year, the Fund foresees a still impressive growth rate of 6.5 percent.
But already next year, the IMF in predictions made in April foresees a slower growth rate. In April, 2009 predictions were set a 5.7 percent GDP growth. The cautious Rabat statements of Mr Strauss-Kahn could indicate that the Fund and Moroccan authorities will have to reduce this still optimistic figure; or even downscale the 2008 estimate.
"Similar to many other emerging market countries, Morocco currently faces the challenge of surging food and fuel prices, which has significantly impacted the trade balance and the budget," the IMF leader said. "Over the medium term, reducing the subsidy burden, particularly through a better targeting toward the poor, will be essential," he advised Rabat authorities.
Morocco however can ill afford to reduce its subsidy level fast enough. Unemployment remains high in the country and great parts of the population still have to benefit from the recent boom and step out of poverty. Any economic recession or deteriorating economic situation for the poor masses could bring about political instability, and the Rabat government is very aware of this.
While the statement of Mr Strauss-Kahn could be interpreted as a slow cooling off of the Moroccan economy, the IMF leader still made it clear he had faith in continued growth. "The financial sector is sound and robust to shocks, and I welcome ongoing efforts to strengthen sector supervision in view of the rapid credit growth, notably in real estate. Morocco's increasing integration in the global economy is also welcome," he added.
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