Moody’s underscores Morocco’s resilience to domestic and external shocks

Credit rating agency, Moody’s, highlighted Morocco’s resilience to domestic and external shocks despite coronavirus propelling fewer tourists and exports which it said will be offset by lower energy imports.

It maintained Morocco’s credit profile at Ba1 stable reflecting “demonstrated resilience to domestic and external shocks,” and buoyed by access to relatively deep domestic capital markets.

In view of the coronavirus shock impact, in addition to continued dry weather conditions, Moody’s adjusted its growth forecast for Morocco downward to 2% for 2020, followed by 2.8% in 2021.

Morocco’s economy grew by 2.1% in 2019 according to the high commission for planning.

Morocco’s early and comprehensive response to limit the spread of the virus is indicative of effectiveness and will contribute to limit the economic impact over the medium term, it said in a report.

Morocco remains vulnerable to the confidence-sensitive tourism sector and through trade channels with the EU where the cyclical automotive industry has been particularly hard hit.

French carmakers Peugeot and Renault halted temporarily production at their Moroccan plants. The automotive sector has topped Morocco’s exports in recent years.

However, Morocco’s resilience builds on the country’s “economic shift towards higher value-added export sectors.

“Continued reforms to the fiscal and business environment that improve the non-agricultural sector’s growth prospects could support this shift,” it said.

It noted that a credit rating upgrade could be prompted by policy action that ensures that the public debt ratio-including external debt guarantees for state-owned enterprises (SOEs) – is firmly positioned on a downward trajectory.