Morocco’s central bank on Tuesday revised its inflation forecast for 2022 upwards and confirmed a slowdown in growth, the consequences of soaring fuel prices and an exceptional drought. Inflation is expected to reach 5.3% for the whole of 2022, compared to 1.4% in 2021, according to projections by Bank Al-Maghrib (BAM), Morocco’s central bank.
Several months of continuous price increases
The BAM had initially forecast inflation of 4.7% for the current year. High inflation is driven ” mainly by soaring energy and food prices as well as accelerating inflation in major trading partners, ” the BAM board said in a statement. At the same time, the BAM forecasts a slowdown in growth to 1% after a rebound of more than 7.9% in 2021, while the government initially forecast 3.2%. This situation is fueled by ” the international situation which remains marked in particular by the stagnation of the war in Ukraine ” but also by ” unfavorable climatic conditions“explains the same source. Morocco has been facing for several months continuous price increases, in particular of hydrocarbons, as a consequence in particular of the war in Ukraine.
The soaring prices in this North African country are doubled by a poor harvest due to an exceptional drought. The Moroccan economy remains dependent on the agricultural sector (14% of GDP). Faced with this crisis situation which is arousing discontent, the government has doubled the budget devoted to subsidies for butane gas, flour, and sugar to the tune of 32 billion dirhams (2.8 billion EUR). It has also disbursed approximately 1.4 billion dirhams (approximately EUR 130 million) since April to help road hauliers (i.e. 180,000 vehicles) following a strike action.
