Casablanca – In early 2024, Moroccan households and businesses have seen a significant increase in credit, reflecting a growing reliance on loans to meet financial needs and sustain economic activities. This trend is highlighted by recent data from the High Commission for Planning (HCP) and Bank Al-Maghrib (BAM).

Increased credit amid economic slowdown

The Moroccan economy has experienced a notable slowdown, with the growth rate dropping to 2.5% in the first quarter of 2024, down from 3.9% during the same period the previous year. Despite this economic deceleration, credit has surged among both businesses and households.

Surging Bank Credits

Bank Al-Maghrib reports that the total outstanding bank credit reached approximately $113.13 billion by the end of May 2024, marking a 4.6% annual increase. This uptick in credit underscores the growing dependency on loans to manage economic challenges and sustain operations.

For private non-financial companies, however, bank credit saw a slight annual decrease of 1.2%, primarily due to a 6.4% reduction in treasury facilities. On the other hand, equipment loans increased by 5.4%, while real estate development loans remained steady at their 2023 levels.

Household credit on the rise

Households have also increasingly turned to credit, with loans growing by 0.9% annually. This growth is driven by a 1.5% rise in housing loans and a 0.9% increase in consumer credit. Despite the increase in credit, many families struggle to meet their financial obligations. Unpaid bank loans have exceeded $4.02 billion, reflecting the financial strain on households.

By the end of March 2024, total household debt to banks reached $39.79 billion, including $5.94 billion in consumer loans. Additionally, households borrowed $0.90 billion from microcredit associations and $8.16 billion from finance companies during the same period.

Mixed sentiments on access to credit

The economic survey by Bank Al-Maghrib indicated varied perceptions of credit accessibility in the first quarter of 2024. About 66% of industrialists found access to bank financing “normal,” while 30% considered it “difficult.” Furthermore, 70% of businesses reported stagnant credit costs, whereas 28% observed an increase.

Broader economic implications

The rise in credit comes at a time when the Moroccan economy faces significant challenges, including a 4.3% contraction in the primary sector due to a 5% decrease in agricultural production. In contrast, the fishing industry rebounded with a 10% increase.

In the secondary sector, which includes manufacturing and construction, there was a 3.6% increase in value-added output, reversing a 0.4% decline from the previous year. The manufacturing industry’s growth slowed to 2.1% from 3%, while the extractive industry experienced a significant 17.7% rise, recovering from a 12.1% decrease.

The surge in credit among Moroccan households and businesses highlights the increasing reliance on loans to navigate economic challenges. As the economy continues to face sectoral disparities and a slowdown in growth, ensuring accessible and affordable credit will be crucial for sustaining economic resilience and addressing the financial needs of households and businesses alike. The data underscores the need for targeted policies to stabilize and stimulate the Moroccan economy, particularly in supporting those most affected by financial strain.