Assessment of the National Business Environment
Political, Macroeconomic, Legal and Social Context
The current monarch, King Mohamed VI, has expedited the political reform process since coming to
power in 1999. The Economist Intelligence Unit predicts that the political outlook will remain generally stable,
although notes possible government challenges due to a ?relatively weak parliament,? and as well risks of
attacks by Islamic militants, which could disrupt the political process. This is particularly relevant as the main
moderate Islamist party, which won the second-largest number of seats in the most recent parliamentary
elections, was excluded from the cabinet (EIU Morocco Country Report, 2008). Given this context, the King
has been careful to make sure social spending a priority in order to minimize social unrest.
With regards to foreign relations, Morocco has ongoing tensions with neighboring Algeria over the
future of Western Sahara, although a plan for more autonomy for the region is currently being discussed. The
other foreign policy priority has been improving trade relations with the EU and the US, given the recent
signing of several free trade agreements, including the Euro-Mediterranean Free Trade Area with the EU, the
Agadir Agreement signed with Egypt, Jordan and Tunisia, and the US-Moroccan Free Trade Agreement.
Macroeconomic stability has been increasing, with decreasing levels of inflation, and decreased
government budget deficits which have led to declining public debt in proportion to GDP (see exhibit below).
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