Africa Business Communities
Standard and Poor’s report upgrades Morocco’s economy to stable on low oil prices

Standard and Poor’s report upgrades Morocco’s economy to stable on low oil prices

World economic index provider Standard and Poor’s has graded Morocco’s economy as stable in what it attributes to forecasted improvement in the country’s external and fiscal deficits, coupled with the benefits of the two year low oil prices unlike its North African peers.

S&P also said it was optimistic that public finance reforms would proceed and that current account deficits would see sizeable reductions.

The biggest point of concern remained the economy’s vulnerability to volatilities in the agricultural sector, which employs nearly 40 percent of the Moroccan workforce.

Last month, Moody’s released a report that stated it expected Morocco’s banks to remain profitable due to stable funding and the country’s “sound” economy, despite the high credit risk they face.

“Nonperforming loans (NPLs) for Moroccan banks have increased to 7.7 per cent of gross loans as of Q1 2016, but we expect them to stabilize,” says Olivier Panis, a Vice President and Senior Credit Officer at Moody’s. “Retail sector NPLs have already stabilized at around 8.1 per cent as of Q1 2016 and reducing share of doubtful and watch list loans points to a slowing trend in NPL formation.”

Cheap sources of fuel, as well as a growing reserve of hard currency, a rise in foreign direct investment, and a marked increase in remittances, have prevented the national budget from tanking in 2016, despite troubles in the agricultural sector in the first half of the year.

In April, weak agricultural output caused by the absence of rainfall led S&P to halve its expectations for economic growth in Morocco for 2016 from 4.5 percent to less than two percent.

www.standardandpoors.com

 

Share this article