Morocco's economic, political and regional landscape: Key risks from this week

Welcome to this week’s edition of our Weekly Risk Watch, offering insights into the economic, political, and security updates that could have significant implications for your business or daily life.

Economy and Markets:

• Morocco’s Manufacturing Sector Declines: The producer price index for Morocco’s manufacturing industries, excluding petroleum refining, dropped by 0.2% in December 2024. This decline was mainly driven by reduced prices in food, metallurgy, textiles, and electrical equipment. This points to a softening in key industrial sectors, possibly signaling potential challenges ahead for businesses relying on these industries.
• Poultry Sector Growth at Risk: Although Morocco’s poultry sector generates MAD 41.7 billion annually and supports 500,000 jobs, Minister Ahmed El Bouari has attributed this growth to government-backed programs. Continued reliance on government support raises concerns about long-term sustainability, especially if the political landscape changes or funding shifts.
• Electricity Demand Spikes Amid Supply Issues: While Morocco’s electricity production grew by 2.4% in 2024, the rise in net demand (up 3.7%) and a significant increase in imports (31.4%) raises concerns about potential energy shortages, especially given the country’s heavy reliance on imported energy and renewable energy’s fluctuating output.
• Investment and Logistics Hub Construction Risks: A MAD 550 million logistics hub project in Casablanca-Settat, essential for the 2030 FIFA World Cup, is expected to create 1,400 jobs. However, resistance from displaced residents and ongoing compensation disputes present significant social and political risks that could delay the project or escalate tensions.
• Foot-and-Mouth Disease Outbreak: Morocco’s suspension of animal feed imports from Germany due to a foot-and-mouth disease outbreak signals the potential risk to the poultry and broader agriculture sectors. The disease, which affected buffaloes and prompted a plant-based feed ban, could disrupt food supplies and agricultural production.

Political Stability:

• Strikes and Labor Tensions: Minister Younes Sekkouri’s rejection of labor unions’ demand for a preamble in the draft law on the right to strike raises the possibility of prolonged labor unrest. This ongoing conflict could lead to work stoppages or strikes in key sectors, disrupting services and the broader economy.
• Parliamentary Conflict: House Speaker Rachid Talbi Alami’s referral of MP Rime Chabat to the Ethics Committee for criticizing Fez’s urban transport system could further polarize political debates, possibly affecting governance and decision-making, especially at the local level.
• International Relations: The French Council of State’s ruling against Algeria and Polisario-backed efforts to ban Moroccan agricultural imports from the Sahara has the potential to impact Morocco’s trade relations within Europe. The ruling strengthens Morocco’s position, but continuing regional tensions could affect future economic cooperation.
• Missing Teenagers: The disappearance of two Moroccan teenagers, Douae and Houda, during a student exchange in London raises growing safety concerns. As investigations intensify, there is a heightened risk to the safety of Moroccan nationals abroad, especially minors involved in exchange programs.
• Taxi Assault and Tensions: Two Casablanca taxi drivers were accused of assaulting a Russian citizen, highlighting ongoing tensions between traditional taxi services and app-based ride-hailing platforms. This conflict could escalate into wider public safety concerns, especially for foreign visitors.
• Earthquake Victims’ Aid Deadline: Victims of the Al-Haouz earthquake are pushing for an extension of emergency aid beyond its February 2025 end date. With reconstruction efforts progressing slowly, many families are still unable to return home, potentially leading to growing discontent and public protests.
• Water Resource Management in Figuig: Local protests and discussions in Figuig over water resource management, wastewater issues, and quarrying impacts on local livelihoods reflect underlying environmental risks that could trigger further instability if not adequately addressed.
• Truck Driver Kidnapping Risk: The families of four Moroccan truck drivers abducted near the Burkina Faso-Niger border are demanding government intervention. The ransom demands and uncertainty surrounding their fate heighten concerns about security risks for Moroccan nationals traveling through conflict-prone areas.

National Infrastructure and Weather Risks:

• Road Closures Due to Snow: National Road No. 9 was closed due to heavy snowfall exceeding 60 centimeters, significantly disrupting transport links between Marrakech and Ouarzazate. As weather disruptions continue, businesses and travelers are advised to monitor road conditions closely.
• Severe Weather Warnings: Morocco is facing severe weather disruptions, including heavy rainfall, snowfall, and rough seas. Authorities have issued warnings, restricting fishing activities and urging caution along coastal areas. These weather conditions could lead to property damage, disruptions in transport, and increased safety risks in affected regions.
• Measles Outbreak Risk: With the planned measles vaccinations starting in February, any outbreaks in schools could potentially lead to exclusion and a shift to distance learning, disrupting education across affected regions.

Cross-Border Stability:

• Moroccan Prisoner Relocations in Algeria: The repeated relocation of Moroccan prisoners by Algerian authorities, many held for irregular migration, raises human rights concerns and poses long-term diplomatic risks. This ongoing situation could lead to further tensions between the two countries.

Security:

• Fraud and Identity Theft in Beni Mellal: A suspect was arrested in Beni Mellal for fraud and identity theft, posing a significant security risk for businesses and individuals. The police investigation is ongoing, and businesses are advised to stay alert to the growing threat of cybercrimes and fraudulent activity targeting personal and corporate data.