The ratings on the Kingdom of Morocco reflect the sovereign's limited flexibility on spending, high debt, and a weak economic structure. Supporting factors include improved macroeconomic stability and solid external indicators. The global crisis is likely to severely affect Morocco's economy in the coming years. We forecast that real GDP growth will decelerate to 2.3% in 2009 and 3.3% in 2010, influenced by a sharp reduction in EU demand for Moroccan products and weaker domestic demand. The textile industry, which is among the largest employers, will, in our view, be particularly hard hit. We forecast that exports will slump by almost 20% in dollar terms in 2009, and that tourism will underperform compared with last year's expansion. Remittances from Moroccan
