Drought, Falling Tourism Threaten Morocco Economy

RABAT, Morocco (AP) — Morocco's new Islamist government finally passed its 2012 budget last week — four months late — while outside parliament hundreds of unemployed protesters demanding government jobs clashed with police.

Long seen as a haven of stability and relative prosperity in North Africa, this close U.S. ally has a rough year ahead. Its budget is overstretched, its farm fields drought-stricken, its credit rating is wobbly, and economic crisis is hobbling its closest trading partners in Europe, even as protests by disgruntled Moroccans are on the rise.

Morocco escaped much of the unrest linked to the Arab Spring elsewhere in North Africa, where the governments of Libya, Tunisia and Egypt all fell, but it could face new troubles this year. The Islamist government elected in November has to pay off a heavy bill of salary increases and promised new government jobs made by its predecessors.

Meanwhile, the skies and Morocco's northern neighbors have made things even worse than originally expected.

Abdelilah Benkirane's government came in with a five-year plan predicting 5.5 percent growth, which it then had to revise downward at the beginning of the year to 4.2 percent. Then at the end of March, the central bank, noting the crisis in Europe and impending drought, cut its own predictions to less than 3 percent.

It was a long way from the past several years of around 5 percent growth buoyed by a string of excellent rains. This year, the harvest is dramatically down and sectors like tourism are suffering as well, as European tourists tighten their belts and forgo Moroccan vacations.

"The main engines of the Moroccan economy are in the process of running out of steam," said Najib Akesbi, an economist with the Hassan II Institute of Agronomy in Rabat.

Morocco remains reliant on agriculture, which makes up 15 percent of the gross domestic product and is almost entirely rain-fed.

In a report from mid-March, the U.S. Embassy estimated that the total cereal harvest would not exceed 3.2 million tons, a sharp drop from 8 million tons in 2011.

"The crops this year suffered not just from drought but from freezing conditions — abnormally low temperatures sustained for a long time," said Hassan Ahmed, the report's author. "That's what really hurt the germination and the crop development."