S&P Expects Morocco’s Economy to Grow By 4.1% in 2020-2021

The international ratings agency Standards & Poor’s expects Moroccan economy to grow by 4.1 pc in 2020-2021, after decelerating to about 3.2 pc in 2019.

The expanding automotive and tourism sectors, coupled with increased demand for phosphates and derivatives, will stimulate the long-term performance and somewhat reduce the reliance on cyclical sectors, notably agriculture, says S&P in a statement

“We view positively the government’s willingness to make the development of the economy more inclusive”, adds the international ratings agency in its forecast.

According to S&P analysts, Moroccan banks credit growth will remain steady at 4 pc over 2019-2020, based on the recovery of corporate growth and still-dynamic household lending. They say that African subsidiaries will continue to contribute positively to the financial performance of larger Moroccan banks.

“We expect customer deposits inflows, especially from Moroccan expatriates, to continue to fully fund credit growth, given banks’ limited access to external funding”, underlines S&P in its prognostics.

“We believe Moroccan banks will continue to use domestic capital markets to match increasing funding needs and reinforce their capital base.”

In early 2018, Moroccan central Bank (bank Al Maghrib) widened the fluctuation bands between the dirham and the currency basket to +/-2.5% (versus +/-0.3%).

“We expect the transition to be long and gradual (15 years) and have limited impact on banks as most financial institutions have marginal exposure to foreign currency-denominated assets”, says Standards and Poor’s in its outlook.