Global economic crisis triggers bear market in Morocco
2008-10-09
Despite efforts by the government and banking officials to downplay the country's risk of impact from the current global economic crisis, Morocco's stock market has suffered a hit in recent weeks.
By Mawassi Lahcen for Magharebia in Casablanca – 09/10/08
 [Getty Images] The Casablanca Stock Exchange is down by more than 86 billion dirhams since September 1st, based on fluctuations in global markets. |
Despite a low rate of foreign investment in the Casablanca Stock Exchange – estimated at just 5% – Moroccan stocks proved this week that they are not impervious to the financial crisis currently shaking up world markets.
The Moroccan stock market has actually been in decline since mid-March, with the outbreak of the mortgage crisis in the United States. However, real deterioration began in September with the start of US banking problems and their effects on the global financial system.
Total losses in the Moroccan stock market since March amount to 112 billion dirhams, or some 18% of the nation's GDP in 2007. More than 86 billion dirhams have been lost since early September as a result of the shocks in global stock markets, reducing the total capital of the stock exchange from 666.73 billion dirhams on September 1st to 580.5 billion on Tuesday (October 7th).
Moroccan officials have been careful to deny any link between the global financial crisis and the Moroccan financial system. Jaloul Ayad, Director General of the Moroccan External Trade Bank (BMCE), is of the opinion that the collapse of Moroccan stocks was due to psychological factors.
"What took place here in the stock market in recent weeks was a case of panic among dealers in Moroccan stocks," he said. "[They] were influenced by what they saw on TV as a result of the Wall Street collapse and its implications across the world."
Ayad maintained that Moroccan banks are immunised against upheavals in the global banking system because of their weak foreign links. "Although our financial system is open and liberal, our banks depend on local resources – especially client deposits – in re-financing their assets," he said, "unlike in some countries, where banks depend on foreign funds to re-finance their assets".
Attijariwafa Bank Chairman Mohammed Kettani also defended the solidity of Morocco's banking system. "The global financial crisis is limited to very advanced financial instruments such as mortgages and derived financial products. These products don't even exist here in Morocco, where banking services are still simple and basic," he said.
As to the state of mortgage loans in Morocco, Kettani said, "Moroccan banks grant mortgage loans based on strict criteria that are based on families' ability to save. The approved rule is that the debt instalments don't exceed 40% of family income. Therefore, I don't see any risks in this respect as long as we control the rate of inflation and interest rates."
Morocco will be more affected by reductions in trade and foreign investment than by financial decline because of the limited nature of the Moroccan stock market, said Ahmed Abboudi, Director of the Moroccan Centre for Business Conditions (Centre Marocain de Conjoncture, or CMC).
According to Abboudi, the CMC expects the global crisis will lead to a 1.5 to 2% decline in short-term growth. The group also expects a related increase in inflation, to break 4.5% for the first time in several years.
"I don't think Morocco will face any trouble in strict financial terms," he said. "However, the aggravation of the global financial crisis, the speed of its spread and its move from finance to the economic circle will undoubtedly lead to shrinking world demand for Moroccan industrial products and services."
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champion Posted 2008-10-09
These Moroccan officials are either idiots or liars. There is an enormous real-estate bubble in Morocco that is deflating just like the USA’s. Moroccan banks will have to face record mortgage failures. May God come to their aid, because Bank Al-Maghrib cannot offer them anything.
BEN Posted 2008-10-09
The way I see it, we need to all the same ensure that our breadbasket does not get infected by a few deadly virus coming from nearby because of some well-known underhanded intermediaries. Without them, we would still be eager for an even-handed opportunity that, from time to time would offer both of us services based on our confidence, the latter of which would immunise us. Therefore, it is sure thing that we have been caught off guard, and that is what is most grievous. “Hello, International Monetary Fund!” Its switchboard ought to be hopping right about now.
Chawki Posted 2008-10-10
While it is debatable whether Moroccan banks "grant mortgage loans based on strict criteria that are based on families' ability to save", one should not overlook the fact that any international slowdown in economic activity will have critical effects on the Moroccan economy and banking system. the international crisis will drive more companies that rely on exports to cut it workforce, which may cause may families (God forbid)to foreclose on their homes. Further, the global economic crisis is affecting many people who bought their second homes in Morocco. Most of those "investors" come from Europe and the Middle East, two regions that have recently seen their stock markets trumble. I believe that the subprime/liquidity problems in the US (and elsewhere) will, sooner or later, affect the bubbled-up Moroccan real-estate market. In a global economy, Morocco, like any other country in the world, is immune to economic crisis.
EL HADIOUI Posted 2008-10-10
Hello, Be it on the political level or be it on the economic level, the more the world converges towards monopolies and speculation, the more impoverished it becomes. It is clear that excessive American liberalism, which implies rapid and enormous profits, does more to prompt speculation and monopolies. The mergers of multinationals in effect hide a monopoly that weighs on jobs and is negative for the economy. Financial and other institutions that have nothing to do with the market speculation of raw materials are now engaging in such practice at the risk of losing their funds. This is not to mention the American pharmaceutical products that are manufactured by those of questionable solvency and certain institutions are buying them, knowing full well that these products are already produced domestically.
3omaro Posted 2008-10-11
Let's stop running off at the mouth, Champion. The real-estate “bubble” cannot have any impact on Morocco’s financial system economically. However, personally speaking, I take this as a result of Morocco’s ignoramuses who turned their capital towards real-estate- something that is destructive to our wealth— instead of investing in production. Even our system of grants is going poorly now. This is simply because of the madness of certain investors who thought this would affect them, just like the General Director of the Moroccan Foreign Trade Bank (BMCE) said. Moreover, what is making the market fail to rebound in Europe and the USA in spite of the bailout plans is, in effect, the psychological effect and the lack of confidence in the government deriving from a misunderstanding of the orientation of this crisis. Morocco is far from being effected by this because the credit that is given in Morocco is given based on having a stable national name. For once our underdevelopment has saved us.
Chawki --- Corrected Version :) Posted 2008-10-11
While it is debatable whether Moroccan banks "grant mortgage loans based on strict criteria that are based on families' ability to save", one should not overlook the fact that any international slowdown in economic activity will have critical effects on the Moroccan economy and banking system. The international crisis will drive more companies that rely on exports to cut its workforce, which may cause many families (God forbid)to foreclose on their homes. Further, the global economic crisis will be affecting many people who bought their second homes in Morocco. Most of those "investors" come from Europe and the Middle East, two regions that have recently seen their stock markets trumble. I believe that the subprime/liquidity problems in the US (and elsewhere) will, sooner or later, affect the bubbled-up Moroccan real-estate market. In a global economy, Morocco, like any other country in the world, is NOT immune from the economic crisis.
acharif moulay abdellah bouskraoui Posted 2008-10-11
In Morocco, thanks to God and to the economic strategy and directives of His Majesty Mohamed VI, our economy is strong and in good health. We have succeeded in establish a socio-political economic strategy, because what interests us is above all else human beings.
BEN Posted 2008-10-13
“For once our underdevelopment has saved us” (3omaro). I love this expression, but what has it saved us from? Let us not even mention the financial institutions that are coming out of this with substantial gains. Do not try to justify these gains in credit; this is not even our subject matter. We are talking about household incomes versus household debt, the freezing of salaries and retirees’ pensions, galloping inflation and so on up until the point that we have an economic environment of unemployment for the young and even younger. In this new, real or hypothetical crisis, we have to wonder the question if the rich will make it out okay. As for the no-longer-middle class, they have not got a pocket book at all anymore. Long live underdevelopment!
acharif moulay abdellah bouskraoui Posted 2008-10-14
The global crisis has had no impact on our economy because we anticipated things and we have perfected the necessary measures. The Moroccan economy is doing well and is in perfect health. I hope that things will get better for all the other countries in the world.
pes 09 Posted 2008-10-16
If we are going to discuss whether Moroccan banks “grant mortgage loans based on strict criteria that are based on families’ ability to save”, then we should not overlook the fact that any slowdown in international economic activity will have critical consequences on Morocco’s economic and banking systems. The international crisis will lead more businesses to rely on exports in order to limit their use of labour, something that could have the consequences of having to move house for many families (may God protect them). Moreover, the world economic crisis affects many people who bought second homes in Morocco. Most of these investors come from Europe and the Middle East, two regions that have recently seen themselves with shaky markets. I think that the problem with subprime lending and liquid assets in the United States (and everywhere else) will sooner or later affect Morocco’s lively real-estate market. In a globalised economy, Morocco, like all the other countries in the world, is not immune to an economic crisis. “For once our underdevelopment has saved us.” (3omaro) I love this expression, but what has it saved us from? Let us not even mention the financial institutions that are coming out of this with substantial gains. Do not try to justify these gains in credit; this is not even our subject matter. We are talking about household incomes versus household debt, the freezing of salaries and retirees’ pensions, galloping inflation and so on up until the point that we have an economic environment of unemployment for the young and even younger. In this new, real or hypothetical crisis, we have to wonder the question if the rich will make it out okay. As for the no-longer-middle class, they are all dead.
tatajova Posted 2008-10-21
No question in my mind the real estate in Morocco has and continues to slow down for almost a year now. There is a huge inventory especially appartments (new construction)but very little demand. People are already defaulting on their mortgage payments. With the global banking crisis, Morocco is going to have a difficult time borrowing from Europe or the States at this time. Inflation has gone up. Everything has gone up in price but income remained the same. Global slowdown will affect demand for Moroccan goods and services including tourism. The decline we've seen in the Moroccan Stock Market (Mor St Mkt)was very much expected. Stock were overprised, fundementals were weak yet people were investing. Even before this global banking crises, Moroccan bank stocks were over priced compared to similar or better banks overseas. I was alarmed when I spoke to some Moroccans who invested in the Mor ST MKT. They had no idea as to what they were getting themselves into. In simple terms, they were gumbling. Now you tell me. What do you think is going to happen in Morocco. These Moroccan officals are welcome to respond too.
مشاركة Posted 2008-10-23
I see that the economic crisis has touched the strongest power in the world, America, even if it has tried to overcome it but without result. How can weak countries escape this rapacious jaw? With my greetings.
mehdi Posted 2008-10-23
It is my hope and all of our hopes as Moroccans for the Moroccan Financial Sytem to stay immune from the global Financial Tsunami but the truth is, this will be very unlikely to happen.I appreciate officials and Banks spokesman'effort who are trying to boost investors confidence in the Moroccan financial Market, however, giving the level of specualtion in both the stock maket and real estate that took place during the last three years.I would highly project that the real estate bubble will soon burst and that many overpiced stcoks will fall. The pain that the global economy is feeling now will not immediatly reach the moroccan territories but as soon as moroccan based companies and internationl companies conducting business in Morocco post their earnings we will see a big drop in earnings as result of currency fluctuations, global economic slow down and drop in exports.All these factors will adversly affect the Moroccan economy and result in many job losses therfore, affecting some form being able to make good on their mortgages. Another point that i want to make is that that the real estate Market has seen its biggest increase in morooaccn in History. This increase was for most part artificial since it didn't submit to the laws of natural economic forces such as supply and demand in contrast it was mainly driven by a an enormous purchasing power from the wealthy, upper middle and some middle classes. This has become the new style of the wealthy"let's buy buildings shuth them down and wait till next year then sell them at a huge profit" 90 if not 100% of investors were gambling in the property market. This is our nature as Moroccans, do as your neighbor does.I do project the Moroccan real estate to drop in the next two years.
Said Posted 2008-10-24
Gobal economy means is one sneezes, the chance for others to get sick is VERY high. Morocco is not immune, because there is not yet an anti verus for this flu. Moroccan policy makers are trying to calm the finacial market by 'words' and not action. The real estate bublle will bust like the US. the big loser in the whole game, the simple moroccan worker who bought his house/apartement at a price that he/she cannot afford, and by losing his job, definetely the bank will lose as well as the number of buyers will dinimish with the number of job opportunity decrease. Get up Morocco, there is a saying 'either you float or you sink' , there is nothing in between. To compete in today's world you need to be efficient and able to react quick to economics shakes. My advise to you stay away from the real estate for now. Morocco's main income is from tourists and immigrants. Tourists/immigrants are now having some financials problems te deal with. My guess is that Morocco needs to redo the calculation about the future of the finance/economy health...and to put on the table :what we should do, instead of ''EVERYTHING is fine''.
francis Posted 2008-10-24
Unfortunately, Morocco will also be indirectly affected by this crisis. I live in France and the cost of Morocco’s real estate (as I see on the Internet) is absolutely crazy in comparison to Moroccans’ buying power. We are also being assured that France will not be affected by the US’s crisis, but you can see just as well as I can given you have French television channels that automobile sales have declined 30%, real-estate is stagnant, unemployment is on the rise at top speed and the economy is based on the stock exchange. I hope that I am mistaken with regards to the situation in Morocco and that Acharif is correct and you will indeed thrive in your country.
HALA Posted 2008-10-24
The global crisis is a catastrophe worse than anything I can describe. The poor Americans in the USA: they have lost their jobs!
Ali Posted 2008-10-26
The only problem is the real estate market and stock-exchange related products. I'm actually glad the bubble is bursting so prices go back to reality and more people can afford a house. For the rest the financial system as in banks, deposits etc ... is all stable and robust. Thank god we didn't engage into the same garbage as the major regions.
miriam Posted 2008-10-27
I am glad to see all these comments and all these people trying to assess the current economic situation in Morocco and analyse anything that could provide a proper response to the global crisis. I also see that there are some Internet-goers who knowingly speak about this affair and who are knowledgeable enough to see what our beautiful country might endure in the months to come. (This goes especially for our emerging middle class, which is supposed to be improving our level of socio-economic development.) So as to slightly popularise this exercise, which could affect our economy for all those who might have recourse to reading your comments (especially those who are somewhat experts on what is going on right now), I have the following questions: will there be repercussions within certain foreign entities that have recently invested in our country and taken on a large apart of the our nation’s unemployment, for example: the call centres that sell life and other types of insurance like AXA France? If such will be the case, then their standard of living will lower drastically and certain people will no longer be able to repay their loans even if they were completely creditworthy when they took out, for example, their mortgages! Did Moroccan banks truly not charge themselves with such hazardous loans? What are they hiding from us what is it that they still do not want to say to the news, as they only speak about the crisis in Europe, the USA and the countries of the Middle and Far East? They never talk about Morocco; it is off limits!!! Must we always suffer from this false tales even in the era of so-called “democracy”??? What will the affect of these practices be for Morocco? That is what I would like to know!
AndreJ Posted 2008-10-27
Even if the real estate prices are going up in Morocco, I don't think that they are overrated (maybe in Marrakech on the economic market). A lot of cash is coming in at the time (all the money out of the stock market has to be reinvest). What's more in Morocco you can get good loan conditions for mortgages that you repay in dirhams. Check out the standard conditions here : http://www.cafpi.ma/simulateur_dynamique.php?lang=en I've heard that at the moment you can get loan with an interest rate close to 5%, or even below.
gol Posted 2008-10-28
If this crisis is comparable to the one of 1929 and we have the Iraqi quagmire Bush screwed America over with and the 72-year-old McCain, then how is it even imaginable that Barack Obama will not be the next president?
kamal Posted 2008-10-29
Who is the tax inspector in Sidi Kacem, Rabat?
jamila Posted 2008-10-29
I do not have much to say, but I do think that I am of the same opinion as Mr Said, because, honestly, the leaders all adhere to one policy. That policy is one of talk. The only solution to them to face the economic problems is to offer rhetoric to calm the financial situation. I add my words to those of Mr Said and I advise the Moroccans to study up on their financial future in order to find some shelter under which they may protect themselves against their enemies.
Fatima Posted 2008-11-13
I am as many people hope that Morocco is affected by this financial crisis because of the investors' greed. none is able to buy a house to live in not to invest on. Real estate prices rose like a skyrocket. Boxed they call apartement are priced like you are buying an aprtment in Boston or new york. Well Good luck
Sahrif mon ku Posted 2008-11-16
It is quite simple: all this began when a few “tourists” started buying up garden villas worth $700 million or more. Then, all of Morocco’s and the entire world’s money-grubbing speculators followed suit. These “tourists” have done the same throughout the world, accumulating profits (?) and then taking off for a new destination. Maybe Mali is next. As for Moulay Acharif, Morocco does not have an economy. If it did, then foreign companies would not have recently absorbed a large part of our unemployment, tourism and Moroccans living abroad. All three of the aforementioned are seriously affected by the global crisis. Multinational companies are tossing people out just like they do back home. The government changed Morocco into a beautiful and exotic country that is simple and affordable in terms of nightclubs and has five-star hotels and golf courses. We are not St. Tropez. There are long tourist bazaars, cafés, winding alleyways and hashish, so the tourists will not be coming anymore. As for Moroccans living abroad, instead of buying an apartment in Souira, in my hometown, I bought one in California: it is cheaper there and I make at least 2000 dirhams a day. (What can you make in Morocco?... Nothing at all!) Instead of developing Morocco and the Moroccans, the government did everything for the tourists. "Give the most to the richest, hoping that prosperity will trickle down to the bottom". Obama explained quite well what happened, not only to Morocco, but the whole world. The only thing is, that this got something serious rolling in Morocco. I hope that the Moroccans will bring their country up to date. You have sold us out, you Moulays and Acharifs. The situation will only get worse. Moreover, we have nothing, absolutely nothing in Morocco. Otherwise we wouldn’t need tourists and have Moroccans living abroad. The downward spiral has already started and it will finish in the rise of radical Islam.
karim Posted 2008-12-22
Unfortunately, Morocco depends on the Western countries' economies having good health. If Europe’s population runs into any large financial difficulty, then the same follows for the Moroccans living abroad and the latter will have to reduce their leisure spending. As a consequence, the Moroccan living abroad send less money to their families living in the country, the tourist go there less and less and Morocco can no longer profit off of the tourists’ money. What is more, by encouraging the housing bubble, the Moroccan state is going to render inactive its real-estate projects currently under construction, since they will become unaffordable both for the tourists and the Moroccan living abroad. There is a strong chance that international businesses will close shop in order to protect jobs in their home countries. By betting on foreign aid, Morocco has forgotten to count first of all on itself. It will have some trouble reviving an economy that, besides agriculture, is only slightly productive and has so very little industry. Pride is good, but the reality of life there requires something more effective in order to guarantee a dignified, dependable life for the youth.
sûrementcrisis Posted 2009-02-01
To “Sahrif mon ku”- I totally agree. Apart from the tertiary sector that encourages hotels with gay ambiance (new to Morocco), and the phosphates, which are being monopolised on by some families but which have values that will never be overestimated, nothing in Morocco has changed. And, unfortunately, nothing will change so long as those who are incompetent reign supreme.
abdessamad Posted 2009-02-12
abdou Posted 2009-02-17
Hi everyone. My name is Abdou. I live in Casablanca’s industrial district No. 157. I am a student at an economics and business school.
Kadoor Moha Posted 2009-03-09
I really wonder what crisis they are talking about here. Morocco has always been in a crisis. So, is the crisis in a crisis? ...Probably. It is a crisis of institutions, a crisis of the elite, a crisis of foresight and so on and so forth. Maybe I should say “catastrophe”: this word is more appropriate than the word crisis. The popular song “Goulou l’aam zine” (literally “Say That The Year Will Be Good”) has become the most ironic of national anthems. Any shoe-shiner will tell you the same. What revolts and repulses me is hearing these same “elite” families (as we like to call them in Morocco) repeat to all those who want to listen that the most beautiful country in the world is vaccinated against the world crisis. These same elite, who have dominated the country since its “independence”, are leading the country from crisis to crisis and disaster to disaster. The only thing that interests them is to monopolise on everything, to know everything, to have power over everything. Morocco is a beautiful, golden milking cow, but its milk has never been tasted by the majority of the “little Moroccans” (as the French colonisers liked to call them). So, is there a crisis or not? Personally, there is one thing that worries me greatly at this time: the song “Goulou l’aam zine” no longer amuses anyone and you never hear anyone singing it anymore. If only our dear “elite” knew of this song.
abidoupoulet Posted 2009-03-29
Just one thing: “You reap what you sow.” In any case, this is a world crisis, so stop saying that this country is not affected. Those inept people, who think only about getting richer, had us fooled, and it will always be the people, especially the poor ones, who suffer. One more remark: Morocco is also affected by this crisis and it is not over yet.
hlilouweld kahlou saken guedamou Posted 2009-03-31
Nothing works right with the Arabs.
salim84 Posted 2009-04-13
Stop saying that Morocco has been spared from the crisis. Be realistic: Morocco is an underdeveloped country and, as a consequence, its economy is depended on the Western countries now suffering from the global crisis. This means that Morocco will sooner or later suffer the consequences of this ravaging crisis. And, economic studies of this crisis demonstrate that the underdeveloped countries are going to suffer from this crisis more than Western countries.
mounir Posted 2009-04-13
Hi to all the Moroccans- We need to confront this crisis, otherwise many of us are going to die from lack of food. They should have not made regulations that stopped the delivery of our food, fuel and other things. I invite you to make an effort to fight this unfortunate crisis. In our solidarity, we can do the impossible – we just have to try! I really enjoy keeping statistics on the prices of food. The cost of a kilogram of potatoes is 20 dirhams, which is way too expensive. Is this crisis going to last forever? What is the future of Morocco: life or death? Is fuel going to come back again? Who knows??? I would really like someone to respond to these questions at my email address. Okay. Goodbye everyone.
salma idrissi Posted 2009-05-05
Hello- I want to thank you for your information on Morocco’s economic situation, especially with regards to real estate. I would really like to get a small apartment in the city of Fes in the 300,000-dirham range. I have been hesitating too much about this, and, in light of your explanation, I might want to wait. Please help me and make this subject clearer for me. I truly need this. I await your news - email me. Thank you infinitely. –See you soon
arab Posted 2009-07-10
Hello- Morocco is already in a crisis due to the fact that minimum wage is 1,800 dirhams and it is one member of the family, who is unemployed, feeding nine mouths. You can but survive. As this "crisis" stretches on, the Moroccans are going to end up eating grass, just like they did in the Second World War. We need to talk about the crisis in Europe or the Unites States, where minimum wage is around 9,000 dirhams and the state covers health care, unemployment compensation and so on.
XX Posted 2009-09-07
Just one thing: You reap what you sow. In any case, this is a global crisis, so stop saying it is not affecting this country and that some other country is. We are being fooled by incapable people who think only about getting richer. The people, especially the poor, are the ones to suffer from this. One more remark: This crisis is affecting Morocco and it is not over with.
simsima Posted 2009-09-21
Personally, I think that even though Morocco was not taken down by global economic crisis, the latter has in any case affected me personally and significantly. Such is the case for many companies, particularly clothing companies, which has closed their doors because their business is principally geared towards export. Be it economic, managerial or psychological factors causing this, Morocco is certainly suffering significant consequences in comparison to other countries.
ikram Posted 2009-10-14
The effects of the global economic crisis on Morocco.
حميش Posted 2009-10-19
These officials try to say that the economy of Morocco has not achieved progress to the point of falling into crisis.
محب للمغرب. Posted 4 days ago
I agree with brother Hamich. Morocco has been in crises for a long time. I think the current crisis is nothing out of the ordinary for Moroccans. Morocco claimed its independence a long time ago, in 1956, but it's still the way it was. What does this reflect? It shows that Moroccan officials are hideous.
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