Bank Al-Maghrib advice: 2022 growth revised to 0.7%, key rate kept at 1.5%

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The Board of Bank Al-Maghrib held its first meeting of 2021 on March 22. An overview of the main points of the central bank’s press release issued on Tuesday.

During this meeting, he provided an in-depth analysis of the international environment, marked by the events surrounding the war in Ukraine, at a time when the global economic recovery is already facing a number of challenges, in particular the rising cost of raw materials. , ongoing disruptions to global manufacturing and supply chains, and strong inflationary pressures.

These phenomena did not remain without consequences for the national economy, which also faces particularly unfavorable climatic conditions, characterized by a significant deficit of precipitation.

The Board took note of the extremely high level of uncertainty in the macroeconomic forecasts prepared by the Bank’s staff. The latter show, in particular, a significant drop in value added in agriculture, as well as some consolidation of non-farm activities, helped by significant progress in the vaccination campaign, easing of medical restrictions, and continued monetary stimulus. and sectoral support measures. They also expect inflation to pick up sharply this year, along with relative stability in external balance sheets and public finances.

In this context, and with inflation expected to return to moderate levels in 2023, the Council decided to maintain an accommodative monetary policy stance to continue supporting economic activity and cushion the impact of the adverse international environment. Therefore, it was decided to keep the key rate at 1.50%.

The Council noted that inflation continues to accelerate, starting in 2021, under the influence of external pressures associated with a sharp increase in energy and food prices, as well as rising inflation in major economic partners. Thus, after 1.4% in 2021, inflation should be 4.7% in 2022 before returning to 1.9% in 2023. Similarly, its underlying component will increase by 1.7% to 4.7% and then slow down to 2.6%.

Suffering from particularly unfavorable climatic conditions, the agricultural company, according to BAM forecasts, should record grain production in the amount of about 25 million centners against 103.2 million centners a year earlier. Thus, the value added in agriculture should fall by 19.8%, bringing economic growth to 0.7% in 2022 after a recovery that should have reached 7.3% in 2021. 17%, bringing growth to 4.6%. As for non-agricultural activities, they should be gradually consolidated with a 3% increase in their value added in 2022 and 2023.

Mainly due to rising commodity prices, the current account deficit should widen to 5.5% of GDP in 2022 from 2.6% in 2021 and then fall to 3.7% in 2023. Imports will increase by 14.9% in 2022 due to an increase in the electricity bill and an increase in purchases of agricultural and food products, as well as consumer goods.

In 2023, the increase will be limited to 1.1%, in part due to the planned reduction in electricity bills. At the same time, exports should increase by 12.5% ​​in 2022 and by 3.4% in 2023, mainly due to an increase in sales of automotive products and an increase in sales of phosphates and derivatives in 2022. Staying at a lower level than before the crisis, travel revenue will gradually recover, rising from AED 34.3 billion in 2021 to AED 47 billion in 2022 and AED 70.9 billion in 2023.

Remittances from Moroccans living abroad should gradually return to pre-crisis levels, returning to 79.3 billion in 2022 and 70.8 billion in 2023 after an exceptional level of 93.3 billion in 2021. In terms of FDI, receipts should be roughly equivalent to 3% of GDP in 2022 and 3.5% in 2023. Overall, and taking into account, in particular, the planned external financing of the Treasury, official reserve assets will be AED 342.8 billion at the end of 2022 and to 347.3 billion dirhams at the end of 2022-2023, which will cover about 6.5 months of imports of goods and services.

From a public finance perspective, despite significant increases in offset spending on butane gas and wheat, the budget deficit should virtually stabilize at 6.3% of GDP in 2022 thanks to exceptional resource mobilization through, inter alia, specific financing mechanisms and income from monopolies. . It should fall to 5.9% of GDP in 2023, mainly as a result of an expected improvement in tax revenues.

Finally, in view of the strong uncertainty associated with geopolitical developments related to the war in Ukraine and their implications at the international and national levels, Al-Maghrib Bank will continue to closely monitor the development of the economic and financial situation and will regularly update its forecasts and analyses.

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