Morocco has performed better economically and financially than South Africa since the pandemic, according to a new “Scope Rating” report published last week, although both countries had similar median and non-investment income before the outbreak of COVID-19.
According to the report, Morocco currently faces fewer credit challenges than South Africa, whose economy is growing at a rate beyond its means, and enjoys better a financial status and better prospects for reform.
The Kingdom’s growth and the flattening of government debt constitute Morocco’s two credit strengths, according to the report, helping the country to overcome challenges in monetary policy and exchange rate management.
While South Africa faces political challenges affecting its ability to address its economic situation, Morocco is making greater progress in achieving economic balance, enhancing its economic growth potential and reducing inequality in the distribution of wealth.
Morocco’s close cooperation with the International Monetary Fund (IMF) is also seen as a key factor in supporting its economy, both financially and technically. Meanwhile, South Africa is showing good results in targeting inflation and exchange rate flexibility, but facing political uncertainty, given that this year’s election in South Africa will determine the pace of reform.
According to the report, Morocco’s robust reform is supporting an economic growth potential of up to 3.0 per cent compared to only 1.5 per cent in South Africa, where the economy continues to be subject to ongoing energy shortages and infrastructure bottlenecks, especially in railways and ports.
Morocco and South Africa both face long-term social and economic challenges, particularly in addressing weak labor markets, but Morocco surpasses S. Africa due to its support for social cohesion and the momentum of its structural reform, which enhances its economic growth potential compared to that of South Africa.
Morocco also faces less serious challenges, given that overall unemployment is in line with Africa’s average of 11 per cent, and youth unemployment is lower than the continent average, at around 25 per cent.