Moroccan’s political risk profile has improved but it’s a different story for the economy.
Morocco’s ECR score has fallen by 3.2 points, to 45.3, since Q2 2012.
The sovereign, in the fourth of ECR’s five-tiered groups, has slipped one place in the rankings this year, to 74, and is 12 places below its ranking two years ago.
During that time, Morocco’s positive 4.4 points differential to Tunisia has disappeared, with the latter now 1.8 points ahead in the survey.
While Morocco’s political and structural risk assessment scores have improved during that time, its economic assessment has deteriorated considerably.
In particular, ECR’s experts have downgraded their perceptions of the government finances, monetary policy/currency stability and economic-GNP outlook.
The growing economic problems were underlined recently by a third consecutive quarter of declining consumer confidence during Q2 2012, according to the state planning commission.
The budget deficit has widened from 4.4% of GDP in 2010 to 6.9% in 2011 and the government has requested a two-year “precautionary and liquidity line” of credit, worth $6.2 billion, from the International Monetary Fund. This is to insure against economic shocks, given that the current-account deficit doubled in size to around 8% of GDP last year, weakening the currency and putting pressure on the state to remedy the situation.
These concerns were flagged by Kojo Amoo-Gottfried, an analyst at FM Capital Partners, and one of ECR’s contributors, who noted: “The economy continues to remain weak, with GDP falling in the second quarter, contracting by 2.6%, leading to increased concerns about the strength of the economy and increasing the likelihood of the central bank cutting rates again after the last cut in February to 3%.
“The worst wheat harvest since 1981 [and a 48% drop on the previous year] is likely to lead to more imports, further increasing the country's deficit. Unsurprisingly, the country continues to remain very vulnerable to events in Europe, its major trading partner, which continues to remain in a recession, with no solution to the debt crisis in sight.”