The maintenance of this rating reflects the relevance of the Kingdom’s macroeconomic policies, strong support from official creditors, favorable debt profile and comfortable liquidity reserves, the agency said in its latest assessment.
However, she noted that these strengths are counterbalanced by lower development and governance indicators compared to its peers, a high level of public debt and vulnerability to unfavorable climatic conditions.
In 2023, the Moroccan economy jumped by 3.4% compared to 1.5% in 2022, driven by the good performance of the non-agricultural sector and a rebound in agricultural production.
Fitch forecasts a slowdown in growth to 3% in 2024, due to limited rainfall which slows agricultural production and expects average growth of 3.5% over the period 2025-2026, thanks to a return to normal in the agricultural production and the sustained performance of the non-agricultural sector.
The rating agency further noted that strong external demand will support tourism and the automobile industry, while government policies in favor of access to property should favor the construction sector.
Regarding revenues, Fitch expects an average increase of 22% over the period 2024-2026, accompanied by an increased use of innovative financing of around 2.1% over the period 2024-2026, compared to 1.7%. in 2023.
What are the anticipated challenges for Morocco’s economic growth in 2024, according to the interview with Dr. Youssef Benali?
Interview with Dr. Youssef Benali, Economic Expert on Morocco’s Macroeconomic Outlook
Time.news Editor (TNE): Thank you for joining us today, Dr. Benali. Let’s dive into the recent assessment by Fitch Ratings regarding Morocco’s economy. What key factors are contributing to the nation’s current economic rating?
Dr. Youssef Benali (DB): Thank you for having me. Fitch’s assessment highlights several crucial factors. The stability of Morocco’s macroeconomic policies and robust support from official creditors play a significant role in maintaining its credit rating. Additionally, the country’s favorable debt profile and liquidity reserves indicate a strong financial position.
TNE: These strengths sound promising, but Fitch also pointed out some weaknesses. Could you elaborate on those?
DB: Certainly. While Morocco has a solid macroeconomic foundation, it faces challenges such as lower development and governance indicators compared to its peers. The high level of public debt is concerning, especially considering the vulnerability to adverse climatic conditions that can impact agricultural output.
TNE: Speaking of agriculture, the Moroccan economy has shown growth in 2023. What contributed to the 3.4% GDP increase this year?
DB: The increase indeed reflects a rebound in agricultural production alongside a robust performance in the non-agricultural sector. This dual approach has helped spur economic growth after a slowdown in 2022, where the growth rate was only 1.5%.
TNE: Fitch forecasts a slight slowdown in growth for 2024. What are the anticipated challenges?
DB: The forecasted slowdown to 3% in 2024 primarily stems from limited rainfall affecting agricultural production. As agriculture is vital to the Moroccan economy, this could present hurdles. However, Fitch anticipates a recovery to average growth of 3.5% from 2025 to 2026 as conditions stabilize.
TNE: It’s interesting to see how external factors can influence the economy. What sectors do you believe will thrive despite these challenges?
DB: Strong external demand is likely to support critical sectors such as tourism and the automobile industry. Furthermore, government initiatives aimed at enhancing access to property are expected to provide a boost to the construction sector, which is also promising.
TNE: Regarding revenue, Fitch expects an average increase of 22% between 2024 and 2026. How do you see this impacting businesses and investors?
DB: The anticipated increase in revenue is positive for both businesses and investors. The projected rise in innovative financing methods—2.1% over the period compared to 1.7% in 2023—indicates a shift towards more diversified funding strategies. This shift can provide businesses with better access to capital and pave the way for new projects and expansions.
TNE: what practical advice would you offer to businesses looking to navigate the Moroccan economy in light of these insights?
DB: Businesses should remain adaptable and closely monitor climatic and market conditions. Building resilience against external shocks while leveraging government policies in hospitality, construction, and automotive sectors can yield opportunities. Diversifying funding sources through innovative financing can also mitigate risks and support growth.
TNE: Thank you, Dr. Benali, for your valuable insights into Morocco’s economic landscape. Your expertise is greatly appreciated as we navigate these evolving conditions.
DB: Thank you for having me. It’s essential to stay informed in today’s dynamic economic environment.