Morocco's new King Mohammed will face a daunting task of reviving an economy beset by rising unemployment and the devastating impact of a cyclical drought that hits the North African country every three years.

Economists and diplomats said on Saturday they expected the new king, enthroned hours after the sudden death of his father King Hassan on Friday, to start dealing with social disparities among Morocco's 29 million population and create jobs for the more than two million unemployed.

"King Hassan has paved the way for a smooth succession ensuring political stability . . . but many social and economic issues must be urgently addressed by the new king," Mr Ahmed El Kohen, a Moroccan sociologist, said.

"King Mohammed, who is very sensitive to social issues, will undoubtedly take the necessary measures to solve jobless issues, combat poverty and gradually reduce the administration's resistance to reforms," Mr El Kohen said.

Economists said the economy was expected to stagnate this year due to a severe drought after a 6.2 per cent growth in gross domestic product in 1998.

At a cabinet meeting held on Saturday to prepare for King Hassan's funeral, Socialist Prime Minister Mr Abderrahmane El Youssoufi said: "We achieved positive results in favour of our people during King Hassan's era.

"But still there are economic and social issues to be solved", Mr Youssoufi added.

Mr Youssoufi's coalition cabinet was appointed in March 1998, with the main task of drawing a long-term plan to combat corruption, bureaucracy, illiteracy and reduce disparities between rural and poor urban areas.

But some market analysts said Morocco would need the goodwill of the outside world, especially its main trade partner, the European Union, to make it through the next difficult years.