Morocco’s Economy Resilient Despite COVID-19 Impact, Fitch Ratings Reports

According to the report from the American rating agency Fitch Ratings, Morocco’s current account deficit represented 4.6% of its gross domestic product (GDP) in 2019, more than four times the global average of 0.9%. And in view of the current situation, it should increase further.

The global health crisis related to COVID-19 will have a significant impact on the tourism sector in Morocco, the report points out. Similarly, remittances from the Moroccan diaspora around the world, which represent 6% of the country’s GDP, will also be hit hard, while the ongoing drought will affect agricultural exports.

The American rating agency also points out that the drop in oil prices will reduce the pressure on Morocco’s imports, as energy imports represent 6.9% of the country’s GDP. The drop in fuel demand due to the declared health emergency also contributes to reducing the kingdom’s energy bill.

Despite the coronavirus effect, Fitch Ratings assures that Morocco has the potential to overcome the challenges of the global health crisis, thanks to its willingness to adjust the flexibility of its exchange rate regime. For the American rating agency, the flexibility of the dirham would significantly strengthen the kingdom’s shock absorption capacity and would also allow Bank Al-Maghrib (BAM) to move to a monetary policy targeting inflation.