OBJECTIVES PRESENTATION

By CHAARI Rania, AFRAITE Ichrak, EL HBABI Lina FIN 3301 01

Weekly Finance Update

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Summary

The earthquake struck a region near Marrakesh, which is a key economic hub for tourism and agriculture.

6.8 magnitude earthquake struck Morocco, causing significant casualties and widespread damage.

Estimated economic losses are up to 8% of Morocco's gross domestic product, USGS said.

The Moroccan Earthquake's Economic Fallout

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Impact on the economy

Estimated Potential losses of up to 8% of GDP

The economic impact of Morocco's earthquakes will harm growth into 2024, potentially forcing the elected government out and slowing the country's fiscal consolidation. Morocco's economy has already contracted because of domestic and international shocks including a drought and high commodity prices, according to the World Bank.

Impact on the economy

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Impact on the Financial Market

• Difficulty in evaluating the damages on local industries and infrastructures caused after the earthquake leads to uncertainty in the financial market. This uncertainty may have an impact on market investors choices in the region.
• The earthquake exposed problems within the infrastructure and the emergency response in Morocco which can lead investors into losing confidence.
• Due to the increase in uncertainty among market investors, high chances of increased market volatility may occur. It may impact the investment portfolio (stocks, bonds and commodities...).

Impact on Financial Market

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Implications on investors and citizens

VS

Investors

Citizens

• Those heavily invested in sectors like tourism or real estate may experience more substantial financial losses.

• investors specializing in infrastructure or construction sectors may see opportunities in financing the reconstruction efforts. Thus, there would be an increase in demand for investments in these sectors.

• Investor need to reasses or reevaluate their investment portfolios since as interest rate may go higher, bonds will decline.

• Losses of homes and jobs, especially near Marrakech.
• The earthquake can lead to an increased cost of living, especially in terms of food prices and housing costs in the affected areas.
• As the country deals with economic challenges following the earthquake, citizens may face higher interest rates on loans and credit, making it more expensive to borrow money.

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Impact on Businesses

Marrakesh Businesses Grapple with Earthquake Fallout

Businesses in affected areas, notably Marrakesh, grapple with operational challenges. Infrastructure damage and safety concerns disrupt operations, impacting financial performance. Substantial reconstruction costs, particularly for older structures, strain financial health.

Impact on Businesses

In conclusion, the tragedy of the earthquake that hit Morocco has left many financial challenges on the national economy, financial markets, businesses and investors. Although construction companies may profit from repair of the infrastructure. In this tragedy, the future decisions and responses of the government are crucial to ensure the stability and economic growth of the region hit by the earthquake.

Conclusion

The Moroccan earthquake’s economic and political fallout | RANE. (n.d.). Stratfor. https://worldview.stratfor.com/article/moroccan-earthquakes-economic-and-political-fallout Cabral, A. R., & Rahman, F. (2023, September 11). Morocco quake could result in damages up to 8% of GDP, initial estimates show. The National. https://www.thenationalnews.com/business/economy /2023/09/10/morocco-quake-could-result-in-damages-up-to-8-of-gdp-initial-estimates-show/

Kalin, S., & Faucon, B. (2023, September 10). Earthquake strikes at heart of Morocco’s troubled economy. WSJ https://www.wsj.com/world/africa/ earthquake-strikes-at-heart-of-moroccos-troubled-economy-3913d593 mod=Searchresults_pos17& page=1

Sources:

Professor: Naily Meryem

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