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Cablegate: Economic Highlights Sept-Oct 2007

VZCZCXYZ0017
RR RUEHWEB

DE RUEHRB #1680/01 3041645
ZNR UUUUU ZZH
R 311645Z OCT 07
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 7677
INFO RUEHCL/AMCONSUL CASABLANCA 3630

UNCLAS RABAT 001680

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ENRG EAIR EINV MO
SUBJECT: ECONOMIC HIGHLIGHTS SEPT-OCT 2007

REF: CASABLANCA 192

1. Included in this round up: the tourism sector continues to grow,
air traffic increases, the automobile sector gains an investor, the
problems at Casablanca Port are resolved, and the energy sector is
set to grow.

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TOURISM GROWS
-------------

2. Approximately 5.2 million tourists visited Morocco in the first
eight months of 2007, an increase of 12 percent year-on-year. In
addition, over one million tourists visited the country in July
alone, according to the Ministry of Tourism. During the same
period, tourism receipts increased 11 percent to USD 5.1 billion.
Tourism receipts are the country's main source of foreign currency.
The number of nights that tourists spent in hotels increased six
percent for the same period, reaching 11.9 million. Marrakech
remains the leading tourist destination and had a growth rate of 11
percent for the period, followed by Casablanca (10 percent), Tangier
(9 percent) and Fez (7 percent). The GOM hopes to attract 10 million
tourists per year by 2010.

---------------------
AIR TRAFFIC INCREASES
---------------------

3. During the first eight months of 2007, the number of
international passengers transiting Moroccan airports increased 20
percent to 6.7 million compared to 5.6 million during the same
period of 2006. Almost half (48 percent) of the passengers used
Casablanca's Mohamed V Airport hub, while the country's two
principal tourist destinations, Marrakech and Agadir, received 28
percent and 12 percent of passengers respectively. The MinistQ of
Transport hailed the introduction of new discount airlines EasyJet,
RyanAir, Jet4You, and Aigle Azur as being largely responsible for
this increase.

--------------------------------
NEW AUTOMOBILE SECTOR INVESTMENT
--------------------------------

4. Renault-Nissan Alliance announced a new USD 840 million
investment in Morocco to manufacture cars. The initial phase of the
investment will cost USD 490 million and produce 200,000 vehicles by
2010. Upon completion, the facility will manufacture 400,000 cars
annually and create 6,000 new jobs, as well as 30,000 indirect jobs.
The plant will be built in the new free-trade port in Tangier and
produce a new generation of light commercial vehicles for Nissan and
variants of Renault's low-cost Logan car. The company plans to
export 90 percent of vehicles manufactured at the plant.

---------------
INFLATION JUMPS
---------------

5. Consumer prices rose 2.2 percent in Morocco during the
January-September period of 2007. Housing and food prices led the
increase, rising by 3.4 and 3.2 percent respectively. However,
inflation was up 1.3 percent in September alone, mainly due to a 2.7
percent rise in food prices. The GOM's predicted annual inflation
rate of 2.0 percent for 2007 is threatened by this recent increase.


---------
CASA PORT
---------

6. The congestion problem at Morocco's principal port, Casablanca
(see reftel), has been largely resolved. Ships had been delayed in
docking and offloading for up to 14 days recently until customs and
offload operations were increased to a 24/7 basis. Empty containers
had been clogging the port until additional storage space was made
available, larger than expected seasonal increases in volume were
complicated by reduced working hours during Ramadan, and operational
changes due to recent reforms complicated matters further. While
the port has weathered this crisis, potential long-term problems of
insufficient infrastructure and operational inefficiencies remain
that could create as additional problems in the future.

------
ENERGY
------

7. Morocco's rapidly growing demand for electricity (8 percent
annually) has led to a number of activities to boost electrical
production. The National Electricity Office (ONE) recently
introduced Initiative 1,000 MW to increase the country's wind energy
capacity to 1,000 MG by 2012. The Tarafaya Wind Farm Project plans
to produce 300 MW of electricity in southern Morocco starting in
2010. In addition, the Energipro Initiative encourages some of
Morocco's leading companies to produce their own power from
renewable sources and offers that ONE will buy any surplus energy at
an incentive price and assures the transit of all electricity.

-------
NUCLEAR
-------

8. During French President Sarkozy's recent visit to Morocco he
announced that France sought to cooperate with Morocco's civilian
nuclear energy program. Reportedly, representatives from the two
governments will start negotiations on a framework agreement
concerning the number and sites of the future plants. Discussions
could also cover the use of nuclear energy to desalinate sea water
for water deficient Morocco.

RILEY

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