Non-performing loans are an inherent part of the financing activities of banks. Fluctuations in non-performing loans over the course of an economic cycle are not worrisome as long as they remain within reasonable proportions. In Italy, after two years of recession (2012 and 2013), a year of flat growth (2014) and two years of sluggish growth of less than 1% (2015 and 2016), non-performing loans have reached a level that hampers the bank lending channel. Experience in other countries shows that it is crucial to deal effectively with non-performing loans to reactivate bank lending.
Morocco’s economy retains several characteristics that provide a solid basis for the future. The macroeconomic environment is solid, infrastructures are good and the banking system is sound and sophisticated. The Kingdom is also capitalizing on its potential as a manufacturing hub. The automotive industry is now the largest source of exports, and several development projects are in the pipe. But the modest economic growth since 2013 is a reminder of structural obstacles yet to overcome.
