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:

• Housing and Youth Card Expansion: Minister Mohamed Mehdi Bensaid announced a new agreement to help young people under 30 access affordable housing and highlighted the nationwide expansion of the Youth Card, which now offers 250,000 beneficiaries discounts on transport, cultural activities, health services, and training programs.
  Risk Factor: Increased government spending on social programs could strain public finances if not well-managed.
• Bank Lending Rates: Bank Al-Maghrib (BAM) reported that the overall lending rate fell to 5.08% in Q4 2024, with rates varying by loan type—5.02% for home loans, 6.99% for consumer loans, and 5.70% for small businesses—following BAM’s recent cut of its key interest rate to 2.50%.
  Risk Factor: Lower interest rates may spur borrowing but could also raise inflationary pressures.
• Handicraft Exports: Morocco’s handicraft exports reached MAD 1.11 billion in 2024, up 3% from 2023, with the sector contributing 7% to GDP and generating an annual turnover of MAD 140 billion, according to the Handicrafts Department.
  Risk Factor: Growth in handicraft exports depends on sustained international demand, which is vulnerable to global economic downturns.
• Tax Declaration Corrections: Over 100 Moroccan companies have requested to correct tax declaration irregularities under the “Right to Error” initiative, which allows voluntary corrections without late penalties, while tax authorities accelerate processing and continue audits to detect undeclared income and tax evasion.
  Risk Factor: Increased audits could expose tax fraud but may also create uncertainty for businesses undergoing scrutiny.
• Exchange Regulation Enforcement: Moroccan authorities are investigating frequent travelers for financial discrepancies, questioning large overseas purchases and undeclared currency, as part of efforts to enforce exchange regulations and prevent money laundering, smuggling, and terrorism financing.
  Risk Factor: Tighter regulations could discourage illicit financial activities but may also create hurdles for legitimate travelers and businesses.
• Economic Governance: Moroccan Head of Government Aziz Akhannouch reaffirmed his commitment to institutional governance and economic reform, highlighting improvements in public finance, employment, and tax relief measures, while stressing the need for effective monitoring and inter-ministerial coordination to ensure successful implementation of sectoral projects.
  Risk Factor: The success of these reforms depends on policy execution and bureaucratic efficiency, which may face resistance.
• E-commerce Violations: Morocco’s Ministry of Industry and Trade issued over 100 warnings to e-commerce platforms following an inspection campaign that uncovered violations such as misleading contracts, lack of Arabic translations, and non-compliance with consumer protection laws.
  Risk Factor: Non-compliance with regulations increases risks of fraud, deception, and counterfeit goods for consumers.
• Livestock Import Issues: Major Moroccan livestock importers are seeking refunds from a French supplier for undelivered cattle, as delays caused by global demand shortages have left several businesses in financial uncertainty.
  Risk Factor: Supply chain disruptions could lead to higher meat prices and financial instability for importers.
• French Agricultural Import Regulations: A new French law proposal aiming to tighten regulations on imported fruits and vegetables could negatively impact Moroccan agricultural exports, as it may impose stricter standards on Moroccan products.
  Risk Factor: Increased trade barriers could threaten Morocco’s agricultural exports and lead to economic losses.
• Unemployment Rate Rise: Morocco’s unemployment rate increased slightly from 13% in 2023 to 13.3% in 2024, with the number of unemployed people rising by 58,000 to a total of 1.638 million.
  Risk Factor: A rising unemployment rate could signal economic distress and trigger social unrest.

Political Stability:

• Trade Union Strike Law Challenge: Moroccan trade unions are challenging the newly approved strike law in the Constitutional Court, arguing it violates the Constitution and workers’ rights, while vowing to intensify street protests.
  Risk Factor: Escalation of labor protests could disrupt public services and business operations.
• Strike Law Approval: Morocco’s House of Representatives approved Organic Law No. 97.15 on the right to strike, marking the completion of the 2011 Constitution’s final organic laws, despite union opposition.
  Risk Factor: Legal disputes and labor strikes could delay implementation and create political instability.
• Nationwide Strike Participation Dispute: Morocco’s nationwide strike saw union-reported participation rates exceeding 80% in key sectors, while official figures from Minister Younes Sekkouri reported only 32% participation in the public sector and 1.4% in the private sector.
  Risk Factor: Conflicting data on strike participation could fuel tensions between the government and unions.
• Airline Compensation Ruling: The Oujda Court of First Instance ruled that Royal Air Maroc must compensate two passengers denied boarding due to overbooking.
  Risk Factor: The ruling could set a precedent for further legal claims against airlines, impacting their operational costs.
• Measles Vaccination Campaign: Morocco’s Ministry of Health announced that 52.1% of children (4.67 million) in the national measles vaccination campaign have been fully immunized.
  Risk Factor: Low vaccination rates could lead to a resurgence of measles outbreaks.
• Abandoned Infant Case: In Bouarfa, authorities discovered a newborn baby girl abandoned near a trash bin, leading to an investigation.
  Risk Factor: Cases of child abandonment highlight social vulnerabilities and potential legal gaps in child welfare protection.
• Bus Crash Incident: A woman was killed and over ten people injured after a fight broke out on a bus near Mssawar Rasso in El Jadida, causing it to crash into a tree.
  Risk Factor: Rising incidents of public transport violence could impact passenger safety and confidence.
• BDS Boycott Campaign: The BDS movement in Morocco has declared its boycott campaign a success, claiming significant pressure on Moroccan businesses to cease trade with Israel.
  Risk Factor: Political activism on trade relations could create tensions and impact diplomatic and economic partnerships.

Cross-Border Stability:

• Mauritanian Visa Agreement: Mauritania has introduced a multiple-entry visa valid for three months for Moroccan professional drivers operating in international transport.
  Risk Factor: Eased visa restrictions could improve trade flow, but regulatory changes remain unpredictable.
• Algerian Date Export Challenges: Algerian date exporters are struggling to access the Moroccan market due to ongoing political tensions and are now targeting alternative markets.
  Risk Factor: Continued trade restrictions could limit market access and increase prices for consumers in Morocco.