Morocco: rising inflation and slowing growth

Morocco's central bank on Tuesday raised its inflation forecasts for 2022 and confirmed a slowdown in growth due to a surge in fuel prices and an exceptional drought.

Inflation should reach 5.3% for the whole of 2022, against 1.4% in 2021, according to the projections of Bank Al-Maghrib (BAM), the Moroccan central bank. BAM had initially forecast inflation of 4.7% for the current year.

The high inflation is driven "mainly by the surge in energy and food prices as well as by the acceleration of inflation in the main trading partners," the BAM board said in a statement.

Slower growth

At the same time, BAM expects growth to slow to 1% after rebounding to more than 7.9% in 2021, while the government initially expected 3.2%. This situation is fueled by "the international situation which remains marked in particular by the stalemate in the war in Ukraine" but also by "unfavourable climatic conditions", explains the same source.

Morocco has been facing continuous price increases for several months, particularly for hydrocarbons, because of the war in Ukraine. The surge in prices in this North African country is coupled with a poor harvest due to exceptional drought. The Moroccan economy remains dependent on the agricultural sector (14% of GDP).

Faced with this crisis, which is causing discontent, the government has doubled the budget devoted to subsidies for butane gas, flour and sugar to 32 billion dirhams (EUR 2.8 billion). 

It has also disbursed about 1.4 billion dirhams (about EUR 130m) since April to help road transporters (180 000 vehicles) following a strike.