Country Risk Rating

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average. - Source: Coface

Business Climate Rating

The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.


  • Favorable geographic position, close to the European market
  • Strategy to move to high-end market and diversify industrial production
  • Political stability and commitment to reforms
  • Growing integration in African market


  • Economy very dependent on performances in the agricultural sector
  • Significant social and regional disparities. Although falling, the poverty rate remains high
  • Weak productivity and low competitiveness
  • High unemployment rate and low female participation in the labor market
  • Political tensions with regional neighbors

Current Trends

Slight Downturn in 2018

Growth in Morocco is correlated to that of the agricultural sector, which, although on a trend towards greater diversification, is still concentrated around cereal production, which is sensitive to weather conditions. 2016, characterized by a period of drought, was followed in 2017 by heavy rains pushing agricultural GDP up by 15.1% and total GDP up by more than 4%. From a sector perspective, manufacturing industries continued their upturn begun in 2016, as has the services sector, buoyed by the recovery in tourism. Construction is still on a downward trend, evidence of the downturn in the residential property market since 2016. In 2018, growth is likely to be more muted mainly because of the underlying effect associated with a slowdown in agricultural GDP growth. However, the economy, excluding agriculture, is expected to continue perform well, buoyed by still resilient internal demand. Household consumption, although benefiting from moderate inflation, will be slightly penalized by falling agricultural incomes. Investment is expected to remain firm, thanks to the ongoing pursuit of an expansionary public investment policy based on major projects, chiefly oriented towards port projects (Tanger-Med 2, the Nador West-Med port complex) and robust private investment encouraged by a policy of tax incentives (exemption from registration fees for new businesses, lower tax rates on certain sectors). Exports, on the way up in 2017, are expected to continue the same positive trend in 2018 with recovery consolidating in the markets of the Kingdom’s main trading partners.

Ongoing Fiscal Consolidation

The fiscal consolidation begun in 2013 has led to a gradual stabilization of the public deficit. Rising internal demand pushed up revenues from indirect taxes, particularly VAT, and from direct taxes. Spending remained contained, despite there being no government from November 2016 to April 2017. In 2018, public spending is likely to edge upwards, boosted by an increased investment drive by public-sector companies, but also by higher operating expenditure associated with the rise in the number of civil servants in the national education system. Financed primarily on the domestic market on preferential terms, the public debt is expected to remain stable in 2018, so debt interest payments look set to remain moderate.

The deepening trade deficit puts pressure on the external accounts. The combination of temporary factors like the increase in purchases of capital goods associated with infrastructure projects and the higher energy bill resulting from the rebound in the oil market has pushed imports higher. However, this increase obscures the dynamism of agri-food, automotive, and aeronautical exports. Phosphate sales have also risen, driven by increased demand from emerging markets despite a fall in world prices. In 2018, firm oil prices will continue to adversely affect the cost of imports, but to a lesser extent than in 2017, while the expected increase in investment will continue to sustain imports of capital goods. In contrast to 2017, the growth in remittances from expatriate workers driven by more favorable economic conditions in European countries, improved tourism income, and higher FDIs will help consolidate foreign exchange reserves at a satisfactory level of just over five months of imports. Following the announcement of a move to a floating exchange rate, these reserves came under downward pressure from the massive purchase of hedging products by domestic economic players and from central bank interventions aimed at stabilizing the dirham’s exchange rate. The reform, which is intended to result in greater flexibility for the dirham, has been postponed to a later date.

Increased Social Risk 

Although he won the 2016 parliamentary elections, the leader of the JDP (Justice and Development Party), Abdelilah Benkiran, failed to capitalize on his victory in the polls by building a coalition able to form a government. After 5 months of impasse, a new prime minister, also from within the ranks of the JDP was appointed by King Mohammed VI to replace him. Saâdeddine El Othmani took up his post as head of the government in April 2017, after concluding an agreement with five other parties. Among the challenges the new government will face is the uprising affecting the landlocked regions in northern Morocco. The Hirak movement is campaigning for greater social justice and action to address the regional disparities penalizing the Rif region. Street demonstrations intensified in July 2017 following the arrest of the movement’s main leaders now facing serious charges. The police response was not the only response by the Moroccan authorities. In October 2017, King Mohamed VI announced the sacking of several ministers and secretaries of state. This reshuffle came after several speeches by the king strongly denouncing the administration’s ineffectiveness and its inability to meet the demands of its citizens. Morocco is strengthening its economic and political presence on Africa by becoming a key player in the region after its reintegration into the African Union on the 30th January 2017, as well as its accession to ECOWAS.


Coface (01/2018)