2023-04-29 20:52:31
In a note released on Friday, Fitch stresses that Morocco’s “BB+” ratings reflect a track record of sound macroeconomic policies and an institutional framework that has supported resilience to shocks, a favorable debt composition, including a moderate share of debt in foreign currency in central government debt, the support of public creditors, in addition to a comfortable external liquidity cushion.
The agency notes, however, that these ratings are limited by weak development and governance indicators, high public debt and a larger budget deficit than peers, as well as the volatility of agricultural production.
Noting that economic growth slowed in 2022 to 1.2% from 7.9% in 2021, as agricultural production contracted by 15% due to a severe drought, the agency forecasts a recovery in the growth of the GDP at 3%, in 2023 supported by better agricultural production.
In 2024, Fitch Ratings expects growth of 3.2%, led by industrial sectors, explaining that downside risks stem from high inflation, tighter monetary policy, slowdown in major trading partners and weather situation. However, it maintains that the implementation of the main structural reforms will support investment and economic growth.
The agency also expects inflation to fall to 5% in 2023, due to rising interest rates, falling global commodity prices and easing supply shortages.
In 2024, inflation will fall to 3.7%, although it will be above the medium-term average, the US rating agency said.
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