An expected rebound in agriculture will lead to higher GDP growth in 2015, forecast to increase 4.6%. Growth is also sustained by increasing exports, mainly to the eurozone.
Middle East and North Africa economies
Atradius STAR Political Risk Rating*:
Algeria: 6 (Moderate-High Risk) - Positive
Egypt: 6 (Moderate-High Risk) - Negative
Jordan: 5 (Moderate Risk) - Negative
Kuwait: 3 (Moderate-Low Risk) - Stable
Morocco: 5 (Moderate Risk) - Positive
Saudi Arabia: 3 (Moderate-Low Risk) - Negative
Tunisia: 5 (Moderate Risk) - Negative
United Arab Emirates: 3 (Moderate-Low Risk) - Positive
* The STAR rating runs on a scale from 1 to 10, where 1 represents the lowest risk and 10 the highest risk.
The 10 rating steps are aggregated into five broad categories to facilitate their interpretation in terms of credit quality. Starting from the most benign part of the quality spectrum, these categories range from ‘Low Risk’, ‘Moderate-Low Risk’, ‘Moderate Risk’, ‘Moderate-High Risk’ to ‘High Risk’, with a separate grade reserved for ‘Very High Risk.’
In addition to the 10-point scale, rating modifiers are associated with each scale step: ‘Positive’, ‘Stable’, and ‘Negative’. These rating modifiers allow further granularity and differentiate more finely between countries in terms of risk.
For further information about the Atradius STAR rating, please click here.
Head of state: King Mohammed VI (since July 1999)
Form of government: Constitutional monarchy. The King has far-reaching executive and legislative powers in Morocco.
Population: 33.2 million (est.)
A stable monarchy
The political situation is rather stable. King Mohammed VI holds most political power in his hands. There is no immediate threat to the monarchy and establishment as the King is popular with the people. He continues to cautiously liberalise the political system and to reform the economy. Maintaining political stability is highly dependent on reducing the high levels of poverty and youth unemployment in Morocco.
Higher growth due to agriculture rebound and increasing exports
In 2014 economic growth slowed to 2.0%, mainly due to a disappointing harvest. The country is still highly dependent on agriculture, which employs some 40% of the workforce, and swings in agriculture output have a major impact on private consumption and the economy. An expected rebound in agriculture will lead to higher GDP growth in 2015, forecast to increase 4.6%. Growth is also sustained by increasing exports, mainly to the eurozone.
In recent years, the government has increased efforts to diversify the economy by developing industrial manufacturing, especially export-driven sectors (cars, aeronautics and electronics). Those efforts are increasingly paying off, as exports of those goods are increasing. Economic reforms have lifted efficiency and attracted greater levels of foreign investments.
Public finances are weak, as government debt increased to 77% of GDP in 2014 and the public deficit was 4.9% of GDP. That said, the government has cut subsidies on petroleum products and is introducing more reforms in order to lower the public deficit.
In 2015 the current account deficit is expected to decrease to 3.7% of GDP due to cheaper oil imports and rising exports. Financing the structural current account deficit with foreign loans and foreign direct investment has been no problem so far. In the long term, it is expected that the high dependency on oil imports will decline as the government is investing in renewable energy.
Morocco’s solvency position is acceptable, with foreign debt amounting to 49% of GDP in 2015. The liquidity position is good and expected to improve to more than seven months of import cover in 2015. Morocco has extended a two-year precautionary liquidity line (PLL) with the IMF until 2016, and while it is not expected that the government will access the facility, it nevertheless helps Morocco’s reform programme and signals creditworthiness.
A potential downside risk to the Moroccan economy remains another deterioration in the eurozone, which is of major importance as an export destination, for workers ́remittances and tourism inflow.