This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

Click on the drop-down menu above to see Morocco's Top Companies and Top Banks.

Taking advantage of geography, Morocco wants to be the Mediterranean's trade and production hub. This is part of the county's strategic re-orientation towards an export-driven economy and away from the vagaries of rainfall. Though agriculture remains key to Moroccan growth, efforts to diversify are paying off. The fact that the 2007 drought did not send the economy into a tailspin is evidence of more effective macroeconomic management. Real GDP growth has been projected at 5.3% in 2008, rising to 5.5% in 2009, but a recession in the major trading partner, the EU, could prove a stern test.

The export focus dovetails with free trade agreements with the US, EU and Turkey. Linchpin to this shift is the vast Tangier-Med port project, which opened its first berths in late 2007, and should be completed in 2009, with a 3.5m/year container capacity ultimately rising to 8.5m, the largest in the Mediterranean. The complex will house free-trade zones and offer incentives to companies. A star recruit is Renault-Nissan, whose €600m factory should turn out 200,000 vehicles a year by 2010.

State-guided industrial policy is focused on developing more business parks to attract sub-contracting operations in the automobile, aeronautics and electronics sectors. As in Tunisia, Morocco's textile industry has survived the global agreement on liberalising trade by moving into quick turnaround short-order garments, a niche EU market in which Chinese factories are unable to compete. There is healthy competition with its Maghrebian cousin over other de-localisation contracts, especially call-centre and business process outsourcing, most notably at the Casanearshore Park and Rabat Technopark.

Behind the grand projects and optimism there is looming water scarcity as tourism and agriculture increasingly compete for priority. Huge investments in electrical power are needed given growing affluence and industrialisation. At least 250,000 new jobs are needed each year, and there is a large, young, unemployed population. The poor state of the health and education systems is reflected in the statistics; barely half the population is literate. Rural poverty is over 20% in some regions and there is a growing discontent in certain sections of society. Extremism can take root in these substrata, as the 2003 Casablanca bombings demonstrated.

The administration cannot be accused of standing still and has been achieving results: civil service reform, creation of a transparency website listing all public procurements, extension of clean water supplies to 90% of villages, financial sector reform and vast infrastructure projects, like the Tangiers-Saidia ring road. A high-speed train link is being planned to shorten journeys between Tangiers, Casablanca and Marrakech.

The disconnect between the governed and the governors creates problems. September 2007's parliamentary election saw a 37% turnout, a fact preoccupying the technocratic elite around King Mohammed VI. New Prime Minister Abbas el-Fassi has by turns been caught up in a financial scandal. He is challenged by inflation in foodstuffs and unable to face down civil servant strikes. The governing coalition of Istiqlal and the left-leaning Union Socialiste des Forces Populaires is shaky, with the latter in talks with the moderate Islamist Parti de la Justice et du Développement about a possible alliance. There may be an emergent middle class (there are 500,000 broadband internet users) to whom this matters. The danger is that the vacillations of the chattering political classes may alienate a hungry, poor and young electorate.