Morocco Braces for Record-Breaking Business Bankruptcies
A new report from Allianz Trade paints a concerning picture for Moroccan businesses, predicting a surge in bankruptcies that could eclipse pre-pandemic levels and even surpass figures from the 2008 financial crisis. With an estimated 16,100 businesses expected to file for bankruptcy in 2024, the North African nation faces a significant economic challenge.
This projected 13% increase from 2023 represents nearly double the average annual bankruptcies recorded between 2016 and 2019. The anticipated number not only exceeds pre-pandemic levels but also surpasses the tumultuous period of the 2008 global financial crisis, highlighting the severity of the current economic climate. This alarming trend is attributed to a confluence of factors, including delayed payments for goods and services, inflationary pressures on raw material costs, and the lingering aftershocks of the COVID-19 pandemic.
The COVID-19 pandemic, while seemingly in the rearview mirror, continues to cast a long shadow over the global economy. Morocco, like many other nations, implemented support measures for its private sector during the pandemic, including loan guarantees to facilitate access to bank financing. While these measures provided crucial short-term relief, they haven’t been enough to prevent a wave of insolvencies. Many businesses that benefited from these programs are now struggling to generate sufficient cash flow to service their debts as economic growth hasn’t kept pace with the accumulated liabilities. This delayed impact of the pandemic is a key driver of the predicted rise in bankruptcies.
Looking ahead, the outlook remains challenging. Allianz Trade forecasts a further increase in bankruptcies to approximately 17,400 in 2025, representing an 8% year-on-year growth. This rate is expected to remain relatively stable in 2026. This sustained elevated level of business failures underscores the deep-seated economic pressures facing Moroccan businesses.
The situation in Morocco reflects a broader global trend. Allianz Trade’s report projects a sharp 11% increase in global corporate insolvencies in 2024, exceeding their earlier February prediction of 9%. This upward revision highlights the deteriorating global economic outlook. The report further anticipates a continued 2% rise in 2025 before a potential slight decline in 2026. The ripple effects of these bankruptcies extend beyond the businesses themselves, with an estimated 1.6 million jobs in Europe and North America potentially at risk in 2025. This underscores the human cost of economic downturns and the importance of proactive measures to mitigate their impact.
Several factors contribute to this global surge in bankruptcies. Rising interest rates, designed to combat inflation, are increasing borrowing costs for businesses, making it harder to service existing debt and finance operations. Supply chain disruptions, exacerbated by geopolitical instability and the ongoing war in Ukraine, continue to impact businesses’ ability to access essential inputs and manage inventory. Furthermore, weakened consumer demand due to inflationary pressures and economic uncertainty is squeezing businesses’ revenues and profitability. These combined pressures create a perfect storm for businesses, particularly small and medium-sized enterprises (SMEs), which often have fewer resources to weather economic storms.
Navigating this challenging economic landscape requires a multi-faceted approach. Governments may need to consider further support measures for struggling businesses, focusing on promoting sustainable growth and strengthening financial resilience. Businesses themselves must prioritize efficient cost management, explore innovative revenue streams, and strengthen their supply chain resilience. Open communication with creditors and financial advisors is also crucial to explore options for debt restructuring and avoid insolvency. By working together, governments, businesses, and financial institutions can help mitigate the impact of this predicted wave of bankruptcies and pave the way for a more stable economic future.
